MacroVoices #499 Has The Luke Gromen Moment Arrived?

This is Macro Voices, the free weekly financial podcast targeting professional finance, high net worth individuals, family offices, and other sophisticated investors. Macro Voices is all about the brightest minds in the world of finance and macroeconomics telling it like it is, bullish or bearish, no holds barred. Now, here are your hosts, Eric Townsend and Patrick Ceresna. Macro Voices episode 499 was produced on September 25th, 2025. I'm Eric Townsend.

Our countdown to episode 500 continues with Forest for the Trees founder, Luke Groman, claiming the silver medal as our number two most popular macro guest ever. And trust me, folks, Luke won't disappoint in this interview. I think it's his best yet, and there will be no shortage of frank talk about how extraordinary and unprecedented some recent news events that most people didn't even notice.

truly were. And of course, we'll discuss what it will mean for markets from gold to Bitcoin to stocks. And of course, no Luke Grumman interview would be complete without an update on Luke's outlook for the U.S. dollar. Then stay tuned for our new post-game trade of the week, when Patrick will translate Luke's financial repression thesis into an actionable trade. If we're really moving from the gradually to the suddenly phase, as Luke alluded, this setup could

have a lot more room to run. And I'm Patrick Ceresna with the macro scoreboard week over week as of the close of Wednesday, September 24th, 2025. The S&P 500 index up. 56 basis points trading at 66.37 the market pressed to an all-time high but now fading over the last couple of days we'll take a closer look at that chart and the key technical levels to watch

in the post-game segment the u.s dollar index up 81 basis points to 97 80 off of a retest of the july lows but the key technical levels to watch is if the dixie can break and hold above that 98 level the november wti crude oil up 143 basis points to 64 43 last week retested the summer support lines and now this week turned higher begging the question as to whether we'll see

a new bull breakout the november are bob gasoline down 102 basis points to 195 the december gold contract up 214 basis points to 3768 Every dip being bought, continuing to punch to all-time new highs, is 4,000 now inevitable. The December copper contract up 389 basis points to 481. Copper ripping higher on supply concerns. after freeport's mine accident uranium up 864 basis points up to 83 even first legitimate technical breakout of spot prices

But will we see momentum just start to build from here? The U.S. 10-year treasury yield up nine basis points, trading at 414. The key news to watch this week is the core PCE price index. And next week we have the ISM manufacturing and service PMIs and the much anticipated jobs numbers. This week's feature interview guest is Forest for the Trees founder, Luke Roman.

Eric and Luke discuss financial repression, the Shanghai Cooperation Organization, gold, Bitcoin, U.S. dollar, and more. Eric's interview with Luke Roman is coming up. as Macro Voices continues right here at macrovoices.com. And now with this week's special guest. Here's your host, Eric Townsend.

Joining me now is Forrest for the Trees founder, Luke Groman. Luke, to my thinking, there could not be a better time for you to be acknowledged as our second most popular Macro Voices guest ever. The reason I say that is nearly a decade ago. ago, I coined the phrase the Luke Groman moment inspired by the Minsky moment. And what I mean by that is when we first started talking nine years ago or ever since then, I have been.

absolutely convinced that you would be proven right in the end on your bold calls that the U.S. dollar was eventually going to fall into decline, fall out of prominence, not be the world's reserve currency anymore, just as the pound sterling fell out of.

popularity 100 years earlier but I also said at the time I thought you were early I thought it was several years away and I knew you'd be proven right and of course you got ridiculed along the way and so forth let's start just by making sure I'm not overreacting

here because i don't think you're early anymore luke i think the luke groman moment is happening right now kind of scares the shit out of me and then i read your last three writings frankly over the weekend and that scared the shit out of me even more so is the luke Groman moment that I describe actually happening the way that I think it is? Am I being too dramatic or is the shit really hitting the fan in a bigger way than most people seem to be talking about?

Well, first, thanks for having me back on and congratulations to you and Patrick. I'm honored to have been a part of your guys' amazing success and wish you all the best and continued success from here. To answer the question, I've always thought of, I guess, the quote-unquote Luke Groman moment was sort of a...

A gradually then suddenly phenomenon, right? Like how'd you go bankrupt little by little then all at once? And you having me on for this actually caused me to search for my first appearance. I wanted to see when it was on Macro Voice, isn't it? It was September 8th, 2017. And the title of that episode was Luke Groman, the biggest mean reversion in 50 plus years is underway.

So at that point, we had been bearish on the dollar beginning late 2016 at a time when most were pretty bullish on the dollar. In fact, he let off by saying that. You know, we had so many secular dollar bulls, we wanted to bring listeners a credible secular dollar bear. So here's Luke. And so at that point, the dollar had already fallen that year in 2017 from 101 to 94 by the time we did that first interview.

You know, we said, look, the de-dollarization transit had kicked off the dollar bull market in earnest in the third quarter of 14 had gone too far. And you'd start to see the deficit in the U.S. as a percent of GDP back then in 2017, rewidened for the first time since 2009 and only the seventh time since 1969. And basically every other time we had a recession or one time we didn't.

We got the dollar devalued at the plaza. What we said was like, look, if you look at the debt levels, a recession isn't a policy option. And so we think that the government's going to weaken the dollar. And so we did see that. And the key thing within that was that was the first time in our career in any dollar at that point, up until that point, we'd been a bull in 16, up until early 17. We had never seen the U.S. fiscal situation, the deficit widen or the fiscal deficit.

sort of break out before you had an EM crisis. But that's exactly what happened. And so what we said at the bottom line was, look. Because foreign central banks stopped buying treasuries back in 3Q14 on net, either the Fed's going to have to raise rates. They tried to. It didn't work because the fiscal situation broke before emerging markets.

They're going to have to force U.S. domestic investors to buy treasuries. They did. Or the Fed's going to have to grow their balance sheet. And so we kind of saw that. And so when you. When you look back to that, it's pretty amazing as, you know, from the date of our first show with you, you know, Fed balance sheet was $4.4 trillion.

It's $6.6 trillion now after nearly four years of QT. On that show, he asked us, hey, what's the trade? And we said, look, in a nutshell, the trade's long gold, short oil. That day, gold-to-oil ratio was 22 barrels an ounce. Today, it's 61 barrels an ounce, all-time high. GDX Gold Miners, which is a proxy for gold to oil ratio, was $22 at $73 today. So you got a couple triples in eight years, 15%, 16% CAGRs for both.

We also warned on that show about long-term treasuries. We said, look, something that jumps out at me as I try to look at the forest for the trees is U.S. retirees, commercial banks, and pension funds are all the biggest bid for long-term treasuries. And if those groups are on the right side of a major macro trade, well ahead of time, it would probably be the first time I can remember.

in my 22 plus year career on Wall Street. And so when we said that that day, the TLT long-term treasury ETF was 125. Today it's 88. So down 35% in risk-free long bonds when, you know, long-term treasuries had basically been a one-way trade for the prior 35 years up to that point. And obviously some pretty well-known long-term treasury bulls were sure that deflation was going to drop.

ETF, you know, the TLT ETF higher and higher and higher. And then finally, on that first show, you know, we said, look, I think the overriding message of the political populism that has broken out in the U.S. and in Western social democracies. over the last six to 12 months is that all U.S. entitlements are going to get paid with printed money.

And I think that's what maybe Mr. Market is starting to discount. I said on the show, you've seen a breakout in the S&P 500 over the TLT, the long bond ETF, a very pronounced breakout in a 25 year chart. So, you know, I went back and looked at it today. And, you know, that day. S&P over TLT ETF was 20. And today, you know, it had recently broken out over 15 for the first time in at least 15, 20 years.

you know, today up from 20, the S&P over TLT is 75X. So nearly quadruple in eight years. And so all of which I bring up by way of background to the question regarding the Luke Groman moment is that I never really saw it as a moment. I saw it as more, you know, a graph. Gradually, then suddenly, you know, and gradually was gold to oil ratio up three X in eight years. It says 15, 16 percent CAGR, TLT down 33 percent in eight years.

GLD over TLT up 4x in eight years. S&P over TLT up 4x in eight years. The dollar's been 94. It was 94 then. It's 96, 97 today. We've been tactically bullish and bearish a few times on this show. You know, I think overall pretty good calls, pretty good positioning early. Yeah, I think probably maybe. But, you know, we should all get 15 to 20 percent CAGR on levered returns on our early calls. All right. In terms of what we were saying.

That was the gradually part, you know, worked out pretty well for FFTT clients, worked out pretty well for my own portfolio. And so with as by way of background, as that context is the Luke Groman moment, I think. I think it's really about, are we going from gradually to suddenly? And to your point, I think we are. I think the suddenly portion is beginning.

You know, we wrote two weeks ago, we thought the fall of the or the excuse me, we thought the week of the SCO, the Shanghai Cooperation Organization meeting was might have been the most important geopolitical week since the fall of the Berlin Wall in 1989. And if that's right. and I think it is, then I think we're likely to see things accelerate further.

Well, look, I want to congratulate you. I think you've made some brilliant calls over the years. And I want to be clear, when I've said you were early, I meant the part about the U.S. dollar falling out of prominence and not being the reserve currency. I thought that was early. You've certainly been very timely in a lot of your.

past calls. Luke, I think what we need to get to is what causes the state transition from slowly to suddenly. What is it that... causes that to happen and i think it's the recognition by all the people that were in denial that oh he was right you know think about the pandemic all of us who called the pandemic early were being ridiculed we were being called alarmists we were you know all kinds of

stuff and then one day it's like well duh everybody knows there's a pandemic you know what do you think you're smart and I think all of the sudden The Luke Groman thinks the U.S. dollar is falling out of, you know, reserve currency status. That means Luke has to be a conspiracy theory nutcase. No, I don't think anybody thinks that anymore. I think it's pretty darn clear.

That what's going on is everybody else is waking up to it or is it something else that's causing that sudden acceleration? I think it is. I think it's a gradual awakening, I guess. And on multiple fronts. Right. So when you. highlight that, you know, you can look at things objectively, right? So all of a sudden, gold is now bigger than the euro.

in global FX reserves. And after another two or three years, if we assume another two or three years of call it 800 to 1000 tons of central bank gold buying, we assume... modest gold price appreciation for the next two, three years, gold is going to be the biggest global reserve asset. And then that just gets into a question of semantics. If gold is the biggest reserve asset, it's bigger than the dollar, what's the primary reserve asset, the dollar or gold? And that, I think, is part of it.

I think the other thing and maybe the biggest thing that is really starting to drive a recognition is the reaction to the trade war. And in particular, post-Liberation Day. Remember, we came into Trump's administration and, you know, it was, hey, we're going to doge. We're going to cut and we're going to strengthen the dollar. And OK. And we tried to doge and we couldn't.

You know, we saw very quickly, oh, we're going to take pain. Well, we took pain for like 10 days and then the treasury market started dysfunctioning. We weren't able to scare money out of stocks into bonds. Yields went up, not down, as Besson's and a lot of others thought. And I think that was sort of strike one, right, to the recognition. Then more specifically.

You know, April, April 7th, I think it was Besant, who on Wall Street, I think is was seen by sort of the the adult in the room, if you will, within the Trump administration. Right. He's our guy. He's the adult in the room. And the adult in the room, Besant, said on April 7th, Tucker Carlson, as the debtor, as the trade debtor, we have all the leverage with China. They're going to do what we tell them to do. And on April 9th, the U.S. Treasury market. dysfunction severely.

very badly. The move volatility index hit 175 or something intraday, which it had only done like when Lehman, 9-11, the 87 crash, like all it was, the treasury market was breaking. And Trump, that led to the phrase taco, right? Trump always chickens out. That led to the first taco instance. We've also, you know, I think people said, well, we don't need the Chinese to supply us. We can get it from somewhere else. And then.

You know, major U.S. retailers went to the White House, I hear, in either late April or early May and said, well, not really, actually. We can't do this without China. And we taco'd again. So I think there has been a recognition, even most recently, how many times have you and I, Eric, heard from China hawks that, look, if we cut off food to China, China will starve. I mean, I've heard it so many times in my career, too many times that count.

And yet the Chinese have not bought a single new crop soybean or a single new crop corn from the United States this year. The Chinese aren't starving. Why? They're getting it all from Brazil. They're getting it from elsewhere.

So they don't need us on food either. So we have no leverage on trade. Our treasury market broke in five, seven trading days after Liberation Day, which, yes, China would have been hurt, but they weren't going to be hurt in seven days. They probably weren't going to be hurt in seven months. So I think that was, you know.

We didn't have leverage on food. We didn't have leverage on trade. We didn't have leverage on the treasury market. And then the rare earth situation got layered on as well, which was, as it turns out, again, something else we've been highlighting for a long time was. Ultimately, you know, key parts of the U.S. military are made in China and particularly around rare earths. And the information was all out there. But again, I don't know if it was confusion or busyness or hubris or what, but.

US policymakers seem to think we have all the leverage. We literally can't go to war without China on the conventional side. And so then you layer that on. And so I think as you kind of layer these things out, that leads to. two things. It leads to the recognition on the trade side that we don't have all the leverage. Then you start looking at some of the stuff that actually the biggest export market for Chinese exporters relative to the U.S. is actually

is actually consumer electronics. And then for a lot of other stuff, the Chinese consume a lot of their own stuff. And then I think the final sort of reason why we're seeing this acceleration now is because rightfully. You know, something we've heard. And like I said, I think it's rightfully that anytime someone says, well, ultimately, the U.S. military backs the U.S. dollar. True.

But we just had it demonstrated that the Chinese rare earths and Chinese factories backed the U.S. military. So what actually backs the U.S. dollar? And I think there is this growing recognition. We saw it even again this week, critical shortages in germanium. We've seen it in a number of other different key raw materials, mostly around rare earths, but elsewhere as well. The Chinese have just stopped sending the stuff as it relates to the U.S. military.

So when you layer all those things on, you realize the US doesn't really have the leverage we thought we had. So when you look at the reaction to. post-liberation day along the five stages of grief, right? Denial, anger, bargaining, depression, and acceptance. There's still a lot of investors that are just now getting out of denial, out of this, hey, we have all the leverage.

And that was pretty obvious from like before it started. You're getting into some of the anger, right? When you hear things like Secretary Besant telling Pulte that he's going to punch him in his effing face at Chamath's birthday party at the White House a couple of weeks ago. I think that's anger. I think he's under.

a lot of stress. I would be too. And now we're kind of starting to get, I think, mainstream into this bargaining. Well, like maybe if we sort of cobble together the Europeans and the Argentinians and we can create this buying group and we can cut out China and like it's bargaining, it's it's.

It ain't going to work. So we still have to get through bargaining and then into depression and then into acceptance of all of this. So I guess I would say the last thing is sort of why it's accelerating is. In the first half of this year, it has become very apparent and obvious that another thing that was said by the establishment was wrong, which is that Russia was.

The ruble was rubble. Russia was a gas station with nukes, blah, blah, blah, blah, blah. They're fighting the U.S. military with tanks that they had to put chips in from washing machines. That was U.S. official government saying that three years ago.

Either our military couldn't beat a bunch of guys who had washing machine ships in their weapons systems, which would be very disturbing, or more likely, and the truth, Russia's industrial base is in better shape than ours because we've been offshoring it. support the dollar system for 45 years and they've outproduced dust. And so I think there's this reason why I think we're watching this quickening is this sequence of demonstrable.

empirically demonstrated facts that we don't have the leverage that we thought we did to support the dollar system. And ultimately, if we can't go to war to support the dollar system from China and Russia trying to change the dollar system because China makes key parts of said military, then we're going to get a change to the system. And that's where we are. And that's why I think we're seeing the quickening.

I want to go back to something that you said earlier, Luke, the Shanghai Cooperative Organization meetings that were held recently. You follow much more closely than I do. All I know about it is I was taken aback by a photo I saw of Vladimir Putin. Marendra Modi and Xi Jinping, obviously, you know, made for the press.

for public consumption photo, intending to show, at least the way I interpreted it, that Modi or that India has pivoted to China and Russia or is in the process of doing so. It was like two or three days later, you know, wash, rinse. repeat i see another photo this time it's putin standing shoulder to shoulder with xi jinping and kim jong-un north korean head of state

And that was at a military parade. I mean, that's a pretty unmistakable message. The guys that are in charge of most of the nuclear warheads on this planet are working together and they don't want to be messed with. So I look at this. And I think, oh my gosh, that's like really big. I got to get on this. I Google.

iconic photo news coverage. And sure enough, it's the biggest thing. Well, the biggest thing in the United States was the photo where Sidney Sweeney apparently put on some blue jeans and that's created an ideological, I don't really get what the battle's about anyway. Luke. I don't think we're paying attention to the most important stuff. So obviously I brought that up to point out the irony of the corporate media's priorities, but I really think there's an important and serious issue here.

You're saying, OK, we're just at maybe the denial stage. Why? Or some people are. Why would you expect anyone to ever come out of the denial stage if the news coverage about. The things that are like really, really important signals are being replaced with Sidney Sweeney's blue jeans. Help me with this. I mean, I'm not just ridiculing them. I'm saying, seriously, until this gets fixed, why would you expect?

you know, the mainstream to ever come around and see what you see, if what they're paying attention to in the news is very different than what you're paying attention to. Look, I think part of the media strategy is to distract and. Without getting myself totally in trouble, I will tell you, my sons certainly noticed it. They're all young adult men. And yes, they absolutely know it. Luke, you had the opportunity. All you had to do.

was to just run with the Sweeney story, figure out how to pull Taylor Swift into it, and you could have... totally leapfrogged next week's mystery guest and locked in more downloads than anybody else. But you want to talk about little stuff like, you know, the future of humanity and how it's going to play out in financial markets. Fine. We'll do it your way. Go ahead. What did you write about on the 9th of September?

On the 9th of September, I said, I thought what had just happened the week before at this Shanghai Cooperation Organization meeting or SEO meeting might have been the biggest geopolitical week since the fall of the Berlin Wall. And what we pointed out was. You had this meeting, which you saw the pictures with Putin, Modi and Xi, which to me, I think discredited an army of think tankers in Washington, right? Because we were supposed to be sort of, you know, splitting those three.

any number of different ways against each other. The picture you referenced to the parade. We had Russia and China signing a major gas deal. that could reshape global energy markets, according to the FT, in which the head of Gazprom said it was likely going to be priced the same way the other gas deals were between them, which was to say in rubles and in foreign currency, which is to say not the dollar.

It highlighted, of course, you know, the military parade unveiling new weapons. It was followed by President Trump accusing Xi, Putin and Kim of, quote unquote, conspiring against the United States of America, which. One of the charms about President Trump is that he will... several times a year actually tell you what's going on by virtue of sort of some sort of impulsive ex post or true social post. And I think these were one of these. I think he got a briefing about like, sir.

This is happening. And he immediately took to his phone and then he followed that up. Even more tellingly, by conceding, it seemed like to me, to the BRICS, saying it looks like we've lost India and Russia to deepest, darkest China. May they have a long and prosperous future together. which to me, like I said, read as a concession post on Truth Social after him getting a briefing about what was decided there. And then finally, all in the same week over that weekend.

The U.S. Pentagon released the new National Defense Strategy Report, or at least drafts of it, to the Washington media, and they said it was going to be pivoting away from China in a much more realist view. and focusing on a more sort of Monroe Doctrine-like policy in our own hemisphere. And so to me, I thought that was an enormous set.

of events. And what I think it meant was that, you know, sort of this, this daisy chain of things we highlighted, started highlighting back in 17. And we've talked through the years that to your point, they were still early. We were still describing things. They stop buying treasuries on net. They start shifting commodities outside the dollar with net gold settlement. They do China 2025, et cetera. They've now reached this point where.

they are comfortable sort of coming out on the town, on the grand promenade, and China, Russia, and India are using their real economic cloud in manufacturing, in energy, in commodities, and in population. They're essentially restructuring the rules-based global order. They're going to force gold back into the system as a neutral primary reserve asset to replace treasuries, to replace Western sovereign debt.

And ultimately, over time, that means Western central banks are probably going to have to engage in some form of yield curve control or its proxy through, you know, the Genius Act stable coins, however they want to do it. And I think that was, I think that week was, we're going to look back in five years, 10 years. And at the same way we look back at when the Berlin wall came down, like everything changed.

Luke, when I read that September 9th piece, I was extremely impressed. Listeners, we do have it for you. It's linked in your Research Roundup email. If you don't have a Research Roundup email, just go to our homepage, macrovoices.com. Click the red button above Luke's picture that says looking for the downloads.

Luke, wow, it was a doozy. I thought it's going to be a long time before Luke comes up with another tree rings report that matches this one. He actually outdid it three days later on September 12th. And I'll tell you, I just had a really strong reaction to that.

I've been reading your stuff for years, and the way I read it, Luke, is Luke's a smart guy forecasting some long-term trends that haven't happened yet. It feels to me like you're reading color commentary on really big stuff as it's going down. to me seems like a really big change from the way you used to write and report on things. And it sounds to me like it's a very direct reflection of what you described earlier, which is we're going from the slowly at first to the all at once. So am I right?

Right. I mean, is that how you perceive what's going on? And obviously we've teased the listeners. Now you've got to tell them all about what's in the September 12th report. Right. I always say it. And so people will laugh when I say it here is, well, you know, what's normal for the spiders? Chaos for the fly. Right. Like you're long gold with all this happening today. You're not unhappy. If you own Bitcoin, I think if you own stocks, you're not going to be unhappy. You own long term bonds.

I think you're going to be fine. But I think you're going to go from, you know, eating steak to eating hamburger to eating dog food to eating kibbles and bits. So that's OK. What really has gotten. Why I was so, you know, really focused on the pace of events and highlighted in that piece was, you know, look, three weeks ago, we had this SEO on the China parade, right? And that effectively threatened.

you know, mutually assured destruction, you know, with a demonstration. Essentially what they said in plain English, a conventional war with China and Russia is going to lead to mass casualty events in major Western European cities, major U.S. coastal cities. That was the message of that parade. in my opinion. And I think you've got to take a step back within that and why it got me so, you know, why what happened that week was so big is if you go to three months before that.

It was reported that the U.S. ran down 15% of its TAAD, T-H-A-A-D, air defense missiles in just 11 days of medium-intensity combat defending Israel. Israel ran out of their air defense missiles even faster.

And it was a supply chain issue. We simply can't make them fast enough because we've offshored too much of our industrial base to China. So basically, we need to ask China nicely to send us the stuff. And China keeps saying no, because we keep telling them we're going to use them to point it at them.

Understandably so. And then if you even take a step back from there, over the past three years, NATO supplied intel, surveillance, reconnaissance, weapons, tactics, strategies to Ukraine versus Russia. And Ukrainians were very good. And Russia won with China's support.

When we saw, you know, partly of that was due to the nature of war changing to drones and missiles, partly because NATO got outproduced by Russia, because we, again, we had to get out of the industrial production business to support the dollar system over the last 40 years. But I don't. I don't think investors recognize what has just transpired here, which is that, you know, the last three years, especially last month, last three months, excuse me, proved.

To a lot of the world, what a lot of people at high levels in finance and in military intelligence had already known, which is that the U.S. defense industrial base has been too hollowed out by the structure of post-$71 hegemony to be able to sustain.

a conventional war versus the BRICS for more than just a few weeks. And certainly not without severe casualties. And certainly, by the way, not without the Fed essentially buying the entire $130 trillion bond market with printed money to prevent it from crashing, which it would. on open war with any of these guys so we highlighted you know just in running through those military things and then in this report what we really on of the 12th what we really highlighted was that a combination of

softening US consumer sentiment. We then highlighted that ultimately there's a fundamental misunderstanding between how much China Can outproduce that actually that the United Nations has has understated Chinese production and consumption and economic. The China's real. purchasing power parity, economic growth. We highlighted that there's starting to be an awakening around, hey, these raw materials that we've been, we have for 40 years said, well, all we need are dollars.

And so let them produce everything. There's starting to be a recognition around that by the International Energy Agency, the U.S. administration, the West more broadly. What we point out is that's great. And the bond market is the elephant in the room. We can't just run industrial policy to start producing a bunch of this stuff for multiple reasons. We don't have the skilled trades.

From the bond market perspective, you know, we could get the skilled trades if we're willing to let inflation really, really rip. But if inflation really, really rips because our debt is already so high from the things we've done, you end up in a position where the debt. will create more of a problem than it solves. So basically what the report lays out is that there is no way this works unless...

we get into some form of yield curve control, whether that's via the Fed, whether that's via Treasury. There's a lot of different ways to try to do that, but that's what has to happen.

And I think we're watching in markets a growing recognition of exactly that. When you talk about gold, you talk about Bitcoin, you talk about stocks, etc. Luke, that was the September 12th missive and listeners, that one too is linked in your research roundup email. Luke, I do want to respect our standing policy that we never ask you to share your latest current writings with our listeners. of respect for your paying subscribers.

I'm going to break the rules on this one at least a little bit. And I certainly understand we cannot share the full September 16th PDF with our listeners. But how about at least giving us a sense of who is Emmanuel Todd and what's he writing about? And why is that kind of important in your mind? Emmanuel Todd is a French anthropologist who is...

Famous for having written three different geopolitical essays over the past 50 years. So he spends most of his time studying anthropology, the study of human family systems and organizations. The first geopolitical essay he wrote was called The Final Fall. He published it in 1976, and he predicted the collapse of communism.

based on the anthropological concepts of declining Russian female fertility rates and rising Russian infant mortality, because infants are the most sensitive indicator of a society that is starting to fail. He wrote his second geopolitical essay. And of course, it goes without saying, you know, he had to wait 14 years or 13 years, but he was right. He published The Final Fall in 1976, Soviet Union Collapses 1989.

He writes his second geopolitical essay. It was called After the Empire. It was published in 2002 and it was published at a time. in which he said, or excuse me, in it, he said that the United States would not enjoy an indefinite unipolar era because the world was too big. The relative size of America is shrinking economically.

And America will not be able to control this world. And this happened at a time, if you recall, where there was great consensus that the United States was in the very early days of a generational unipolar power moment. And once again. He was right. Based again on strictly on anthropological inputs. And then that brings us to the third. geopolitical essay that he has written in his life. Todd is now an old man, of course, and...

He published in January of 2024 what he thinks will be his last geopolitical essay, which is written in French, still not translated to English, interestingly. It's titled The Defeat of the West. And in the defeat of the West, he states that as a result of many of the same dynamics that led him to predict the collapse of the USSR in 1976, he says, quote, the West has been defeated industrially and economically, citing U.S. infant mortality.

which is above Russian infant mortality, U.S. female fertility rates falling, U.S. industrial base having been hollowed out by offshoring in a manner reminiscent of what happened to the Soviet Union when he wrote his first essay, newly graduating engineer numbers in the U.S. and educational attainment more broadly in the U.S., falling for decades. So he wrote that in early 2024, before it was obvious that the U.S. or that the proxy war in Ukraine was not going for NATO.

In April of 2025, he gave a public speech discussing the defeat of the West in which he said, we're past the turning point. We're moving from defeat to dislocation. And what makes me cautious. is my past experience of the moment of the collapse of the Soviet system. I predicted this collapse, but I must admit that when the Soviet system actually collapsed, I was not able to foresee the extent of the dislocation and the level of suffering that this dislocation would bring to Russia.

We read it and he published it publicly at the end of May. We read it then. We kind of set it aside in our cutting room because it didn't feel like it made sense yet. And we pulled it out as part of... the report of September 16th after the events of a few weeks ago, because it's starting to feel like it makes sense. Now, our friend Balaji Srinivasan came at this exact same issue.

From a completely different angle in conversation with our friend Peter McCormick a couple of months ago in July, Balaji came at it from a technologist, but he came to the same conclusion, which is essentially we're past the point of no return. China has disintermediated Red America.

The Internet and Bitcoin have disintermediated blue America, right? They control media and they control the money and they're being disintermediated in the same way that China disintermediated red America with manufacturing in the military. And so we're getting this dynamic that we're watching.

every day in our lives now, just everywhere. Blue fights with red, red fights with blue, red fights with China, blue fights with Bitcoin and the internet. And the U.S. as a nation pulls back because it's getting beaten. in its own open global capitalist competition game that it created. And it's getting beaten by the global South, right? How often do we hear China's outproducing us? We've got to get them to like slow down. They're producing so much stuff.

They're beating us at our own game. That's highly inflationary over time. Best case in this report, in addition to what Emmanuel Todd said in May of this year. or excuse me, he wrote the book in January, but he said this in April and May of this year. In addition to what Bellagio and Peter McCormick said in July of this year, we highlighted a Chinese People's Liberation Army general who gave a speech in 2015.

to the CCP senior leadership, he warned of some of the very same things. Most Western investors either never even saw it or those that did kind of laughed at it. They're not laughing anymore. I don't want to take things away from our own folks here. The U.S. military was ahead of this more than any of the above, as were some major U.S. industrial titans from GE, Google, Intel.

But most Western investors ignored or laughed. I'm going to read a brief passage from top U.S. military leadership in 2011 in Edward Luce's 2012 book, Time to Start Thinking. Quote, senior U.S. military leadership 2011 said this, quote, the window on America's hegemony is closing. We are at a point right now where we still have choices.

By 2021, we will no longer have choices. The U.S. is way too dependent on its military, should sharply reduce its global footprint by winding up all wars, notably in Afghanistan and by closing peacetime military bases in Germany, South Korea, the U.K., and elsewhere. All this is a means to an end, which is to restore America's economic vitality. Our number one goal should be to restore American prosperity as such. We recommend the Pentagon shrink its budget by at least 20 percent.

Most of the savings would be spent on civilian priorities such as infrastructure, education, foreign aid. Nobody here thinks the politics in this town are going to change overnight. All we're saying is that we're in trouble if they don't. This is not about ideology. This is about understanding.

where we are as a country. So the U.S. military has been warning about this for 14 years. Of course, they said we're going to be out of time in 2021. And the problem, of course, is that 2021 is almost five years in the rearview mirror now. And so when you then layer that with what the Chinese general highlighted, some of the same dynamics, what an anthropologist who in his speech actually apologizes, said, this is not what I want.

This is not what I wanted to come up with, this data. The data are the data. You can't lie about the fertility rates and the infant mortality rates. They are what they are. And here's what they're saying. And I'm sorry, America. And so that's what we highlighted.

And it didn't make me happy to highlight it, but it is what it is, right? It was hard to write. It was harder for me to write than it was for you to read, if you can believe that. Well, Luke, if I had to write the executive summary of Todd's writings, I could do it in six words. The Luke Grumman moment is upon us, or I guess I should probably translate that to.

Your frame of reference, which is the phase of the Luke Groman, I don't know, evolution, we're hitting the acceleration point. We're going from the happens slowly at first to the then all at once. We know that... But Emmanuel Todd, who has a pretty darn impressive track record.

basically thinks that this is a very pivotal moment in history. I want to know what Luke Groman thinks this moment is going to mean. How turbulent could things get in financial markets? And most importantly for this audience, You know, who are going to be the winners and losers? Obviously, gold has been a big winner here. I think we're headed into, you know, the famous line about inflation is investors always forget that inflation is really, really good for the stock market in the beginning.

at the beginning of the inflation? Is that what's driving this stock market? And how long until we get to the bad part of the inflation as far as the stock market? And for that matter, any other markets that come to mind?

Yeah, you know, I think there's probably some investors that will listen to this and say, well, you know, never short America. Right. And look, I agree with that. And that's also just a comforting platitude. It's a cop out. It doesn't do anything to fix the problem. And I would also say like. Which America? From 1940 to 1980, what was good for GM was good for America. And from 1980 to 2020, what was good for Goldman Sachs and what's good for the treasury market is good for America. And now...

What's good for the defense industrial base, the working class, the middle class is I think we're I think we're like two years into that is 40 year stretch of that. What's being good for America. So. You know, I think we're going through this phase change. I think it's an early I think we're early in it. And I think it's important to say, look, we're not saying short America. What we're saying.

is short the real value of long-term treasuries and short the dollar against gold, Bitcoin, and stocks because the U.S.'s own military is saying the U.S. is four years past the we're out of options date. And so... I think what's going to happen is we are going to run this economy so hot. And I think we're going to repress the real value of long-term treasuries so much versus gold and Bitcoin and stocks. And that will ultimately fix the problem.

It might create some others that we can touch on in a second, but I think it's really important that. You know, recalling COVID, the U.S. got debt to GDP, you know, after the stimmies and everything initially and the economy was shut down, debt to GDP blew out to 130 percent, if I recall correctly. And. The U.S. got that right back down to 118 or 117 percent in just a couple of years. And recall that at the peak in COVID, I think the trailing 12-month deficit was running at $3.3 trillion.

They got it down to $1.4 trillion or so in, I want to say, like 18 months. And how did they do it? Simple. 8% CPI. Fed QE with rates at zero into rapidly rising home prices, 50% to 70% year-over-year gains in the S&P, which gooses consumer spending at Goose's tax returns. So all they're going to have to do is run inflation hotter for longer, and the deficit will quickly fall to something sustainable.

US nominal GDP is going to soar. We'll be able to reshore. Wages will be able to rise. The release valve will be the dollar, the real value of long-term treasuries. I would think that stocks, I think stocks will soar in dollar terms. They've already started to fall in gold and Bitcoin terms. And I think that's going to continue. Same thing with home prices. You know, since COVID, home prices, I think, are up like 65 percent in dollars. They're down like.

40% in gold terms and down like 95% in Bitcoin terms since COVID. So now what I'll say about all that is what I just laid out that they are going to run this thing so much hotter than anybody realizes. That's the optimistic case. And that's why I say what's normal for the spiders, chaos for the fly. Look, if you're a boomer and you got 80% of your money in long-term treasury bonds, like... You're going to go from eating steak to hamburger to, you know, kibbles and bits. And that's sorry.

And to be honest, that makes some sense, right? Boomers are getting 70% of all-time record tax receipts. The elderly boomers in silent generation are getting 70% of all-time tax receipts for entitlements. We can't raise taxes, so we're going to inflate them. So that's the optimistic case. I hope we can get through this without a real domestic political convulsion. I am admittedly less confident about that.

after the assassination of Charlie Kirk, after the assassination of the UnitedHealthcare CEO, Brian Thompson, and maybe more importantly, the polarized political reaction to those assassinations. That really, as shocking as those were, those were like a double dose of shock was the reaction and the polarized reaction.

Look, if I'm wrong and we can't hold it together as a nation, and I don't know exactly what that means, but if we can't, then I'm going to be dead wrong about stocks going up in this. I'll be really right on gold and Bitcoin, but I'll be dead wrong on stocks because. You know, I think right now we have a moment to try to gather ourselves and come together. But the longer we don't do that.

I would, again, really reiterate that foreigners have $62 trillion gross and $27 trillion net in dollar assets. They are so long dollar assets. We saw post-Liberation Day. What happens when just a little bit of money leaves the United States? Stocks down big. Ten-year treasury yields up big. Bonds down big. Dollar down big.

Right. So that was just a little bit of money that moved out of the U.S. post Liberation Day. If we get an honest to goodness political convulsion here. Wow. That is going to be that's the Fed's worst nightmare. You're going to get stocks down big, bonds down big. dollar down big. And then what do you do? You raise, you know, you raise rates, you cut rates. And so that is to me, something I'm watching very closely for signs, hopefully that we calm things down or if we don't.

But I'm hopeful we can get this, you know, sort of the easy way. Right. Which is I put easy way in quotes on my notes here because it's look, it's it's not going to be easy. But it's the easier way. When you make really bad long-term decisions for 40 straight years, sooner or later, you'll run out of room to kick the can. And we're there, right? For a number of different reasons, we're there.

I think ultimately what it means for markets is I think inflation is going to run so much hotter than consensus thinks. I think it's entirely possible that it's reported as sort of slightly elevated. And frighteningly, the release valve, if they do that. will be more domestic political tensions. And so I think, you know, I think we're in for a bit of a bumpy stretch here within sort of this fourth turning dynamic.

Luke, as you've been describing all of this, it's basically forming an analog in my mind that I'd like to run past you. And this pertains specifically to this question of the state transition from, you know, slowly at first until suddenly. at once. And I guess I'll draw an analogy to the pandemic.

Back into the end of 2019, there were plenty of people on the Internet that, you know, know about these things that were starting to talk about something's going on in China. The rest of us didn't understand that significance and couldn't possibly be expected to. Then there's a state transition that happens next where, okay.

Jim Bianco was probably the first guy in finance to really understand the scope of this with other people in other fields. But right around the end of January 2020, it was January 30th of 2020 that we dropped everything and replanned. macro voices in order to get Dr. Chris Martinson on to talk. He was one of the people who had been talking about it since 2019.

It wasn't really any kind of wake up to what I'll call the second tier of people. You know, at first it was just the Luke Groman writing about this stuff 10 years ago. That's like Martinson writing about the pandemic in 2019. Nobody paid attention. Nobody cared. Nobody got it because it just. wasn't registering yet. Then in somewhere around the beginning of February, there was this middle period.

where it wasn't just one or two guys. It's like 20 guys now. It's the smartest guys in finance, like Bianco, that are all over it. But they're being ridiculed left, right, and center as alarmists. I had all kinds of hate mail for doing that. that that show on january 30th saying that we were irresponsible fear mongers and you know yada yada yada and then that went on for a few months and one day snap

Everybody knew that it's a global pandemic. Nobody questioned it. And it's like, oh my gosh, everybody's panicking. I feel like this U.S. dollar secular decline thing. I think we went from the only people like Luca writing about it to the 20 guys like as smart as Jim Bianco have figured it all out now. And I don't think we've yet gotten to that sudden everybody gets it moment.

Does that resonate for you? Am I on the right track? And what could happen when we get to that moment? No, I think that I think it's exactly right. And the reason I think people aren't there yet is it's a little bit cross discipline, right? When you're in our business. You're focused on markets and that. And doing what I do, owning my own business, I have the luxury to write about what I think is interesting. And so I have a bit of a cross-discipline approach that I think is somewhat unique.

The reason I bring that up for this is I think there's still a lot of of like I think we're no longer in the denial stage of China 2025. You know, when they roll that out. Right. People like, oh, ha ha ha. Like no one's laughing about that anymore. They're not in denial. They're a little bit angry still, right? Oh, they're cheating and they're overproducing and they're manipulating their currency and like boohoo, you know, compete. I think we're really in this bargaining stage.

And that's to your point, like there's a recognition, but it's not the bargaining stage is still around. Well, we can get we can get the Europeans and we can sort of block out. China and the bricks and we're only looking at it from one side and nobody is really doing

sort of the deep look of supply chains to go, okay, break your supply chains down, break your trade balances down and see how much of it ever touched China. And if they, at some point they're going to do that and they're going to go, oh my God, oh my God. Like. And that will be sort of that moment. And the sense I get is the old famous saw, right? Amateur study tactics, professional study logistics.

You know, the bargaining stage was talking tactics, right? You know, Besson's talking tactics around, well, we're just going to get this group and we're going to isolate China. The logistics. are the guys within the U.S. military and intelligence communities. And I just get the sense that they've done the digging on the supply chains. And like, they know we don't have the leverage.

Whenever that common knowledge goes from the special knowledge, like you were talking about, sort of the isolated, you know, 20 guys to, oh my gosh. Yeah, then I think things are going to happen really fast because, you know, to me, the conclusion is just so crystal clear. Look, we cannot win this trade war. The treasury market will blow up first every time. You can game it out however many times you want it.

In the end, the only way it works is if the Fed or the Treasury basically buy much of the bond market and yield curve control it. Historically, when we've gotten in these tense situations, as the military warned about in 2012, right, we rely too much on our military. Historically, geopolitics since the year 2000 has been like.

Don't do anything to mess with the rules-based global order because the American military will show up and kick your head in. That's geopolitics since the year 2000 in 10 seconds. Whoa. U.S. military critical components are now made in China. That too, there's still denial, some anger, not even really bargaining yet. When you put those two cross-discipline things together, which is our debt's too high, our supply chains are all...

touching China, even if we want to pretend that they don't. And our military critical components can't, we don't have the industrial base anymore. Those three things together lead you to a conclusion. Either we're going to go to nuclear war.

And there's no winners there. I think it's uninvestable. I hope that's not how it's going to go, but let's set that aside. Or we're going to run this super hot and the market's going to wake up and go, oh my God, I can't own bonds. I can't own long-term bonds.

I need to own gold. I need to own stocks. I need to own Bitcoin. I need to own anything but bonds, anything but dollars. And anything but dollars is not even really fair, right? Anything but bonds. Because I think dollar stocks, I think you're going to be fine. I don't know when that moment's coming, but I don't think it's years away anymore. I think that's, you know.

I think it's six to nine months away because then I can overlay that with the fiscal situation and look like I can overlay that, you know, the fiscal situation. We're right now with receipts at all time highs. We have true interest expense, which is interest. plus entitlements, plus veterans affairs, it's 100% receipts and receipts are highly sensitive to the stock market. So that like we're to the wall there. We're seeing the U.S. economy on the consumer side actually slow, which is.

really weird because it's really bifurcating, right? The bottom 50% are really suffering and the top 10% are, you know, it's, you know, party on Wayne, party on Garth. And that then reverberates into the geopolitical side, right? You're starting to see people writing articles like, what is going on in America after the last two, three weeks? And so it could be a geopolitical trigger. I don't know. Or not a geopolitical, but a domestic political trigger. I don't know. Or simply just a.

a spooking of foreign investors, right? We have so much foreign money here, 62 trillion gross, 27 trillion net. If they start to get spooked about the domestic political situation, do they take five, 10% of their money home? Then what happens? So, yeah, I think we are like right on the cusp of exactly what you describe. And there can be domestic political, there could be market, there could be trade, there could be geopolitical, there could be any number of things that could spark it.

Luke, I was fascinated by your mention of military and digging into supply chains and so forth. I want to share a quick story with you. I was recently surprised to be invited to speak at a supply chain conference. So I do a Zoom call with the organizers. I say, guys.

I'm really flattered, you know, thank you, but you've misunderstood. I'm not a supply chain expert. I really don't know very much about it at all. I'm not qualified to speak at that kind of conference. But boy, I would love an invitation because I'm very curious to learn more about the people.

who do the things that you described, the people who are analyzing things like, hey, we're about to start a war with China, but we're completely dependent on them for rare earth elements and for almost all of our medications and for all these other things. really be fascinated to attend that and learn from the experts.

Who is analyzing these things? Because I don't know that much about it. And they just looked at me like, Eric, you don't get it. We do know exactly what your qualifications are. The answer is nobody that goes to our supply chain conference is looking at any of those things. And we want. you to come and point out that they should be. And I'm like, wait a minute. What? Supply chain people are not focused on that? Well, I got to believe they are in the military, but you know, that would be.

classified and so forth. It sounds to me like most of the people in the commercial supply chain industry are not really focused on the things that you're talking about. And boy, I agree with you that they should be. I mean. You know, it's one of these things like I have a good friend who worked for a major global international freight forwarder. And so someone in that seat is going to know. And, you know.

When you talk to folks like that, it's, you know, what they highlight are some of just, you know, what I would highlight are some of the like seven or eight of the 10 biggest container ports in the world or in China. And it took them 30 years working at the fastest pace in human history to build them. And then there's a whole scale and network around.

engineers and factories and roads and infrastructure. And it's simply world-class across the board. And they've, again, 30 years working the hardest, fastest pace in human history.

And that's kind of where I say sort of like the bargaining side, right? When I hear those things, I say, well, we're going to move it all to Vietnam. Well, sure, you're going to move some to Vietnam. You move some to India. You can't move it all. Why not? Because literally you can't fit it. And even if you could fit it.

which you can't, it's going to take you, do you think the Indians are going to work faster than the Chinese did? Like, I remember being an investor in a Chinese SPAC, where the Indian management team come in, they go, Luke, you have to understand in India, you know, the British invented administrative stuff and the Indians perfected it. Like it is just, you know, it takes longer to get stuff done there.

So you're like best case you're talking if you did it as fast as the Chinese, you're talking about 30 years. You're not going to do it that fast. And even if you could fit it, which you can't, and even if you get it done in half the time of the Chinese, which is still put us 15 years, which you can't.

You still have the elephant in the room, which is the global bond market, which is like all this stuff is in China and optimized the way it is for to to keep inflation down to support the bond market. That's why we did this. That's why we did this at the end of the day. So if you want to do it, it's going to be inflationary and probably wildly so, which wouldn't be a problem except the debt levels in the West in particular are so high.

That 10, 20, 30 basis points from where we are today, maybe in some cases, you know, the U.S., maybe 60 basis points on the 10-year starts to trigger a debt-death spiral. Rates up, stocks down. that we've seen happen multiple times in the last five years. Japan, same story. Europe, same story. UK. So that's where I kind of look at this, you know, and I think it's a great summary you highlight of just like there's still this bargaining phase of.

Well, we just need to work really hard and we can move stuff out of China. We can cut China off. You know, now without a frigging 83 DeLorean and a flux capacitor that goes 88 and you go back in time 40 years and you undo the stupid stuff, the short term focused.

corporate profit maximizing stuff that you did to break unions and support the bond market for 40 years under the guise of neoliberal economics. You do that. Hey, if you've got a time machine, let me know. We can have this thing fixed, you know, six months.

But failing that there's like it can't happen. And so I think once we go from bargaining to the depression of like, oh, God, then you're going to realize like, OK, well, they're either going to let everything collapse. They're not going to do that. They're going to print money.

You know, and they can't go to war. Right. That's another way out. They can't do that conventional. Hopefully they're not going to go nuclear. They're going to run this thing so hot. They have to. That's the only choice. And I think I guess I would just finish by saying like. I think the whole discussion around Fed independence and Stephen Myron, I think is totally off base with like most U.S. investors are playing by the old rules. You know, I've been doing this 30, 32 years.

Most people that have been doing it as long as I have, they're playing by the wrong rules. They're playing by the old rules. They don't understand. Like, is inflation too high? It doesn't matter. The choice is bring this stuff back and blow up the bond market on a real basis or don't. and lose like those are your choice this whole debate around should the fed cut should they raise are they independent it's noise it's noise the variant perception is they are doing to the fed what they are doing

because they have to because of what we just laid on the supply chain front. The bond market has to be anesthetized for the U.S. to get back on the right track again. Luke, I can't thank you enough for another brilliant interview. It comes as no surprise that you're right at the top of our listener rankings for top guest of all time in terms of total downloads. Frankly, I think you're writing in your Tree Rings report.

pretty much speaks for itself. We've got two examples of that linked in the Research Roundup email from September 9th and September 12th. For people who want to find out more about what you do or are interested in subscribing and so forth, tell us what you do at Forest for the Trees. How do people sign up? Sure. Absolutely. You can find out more about what we do at FFTT-LLC.com or for both for institutional and mass market products and on X at Luke Grohman, all one word.

And don't miss the two samples that are linked in the Research Roundup email. Patrick Ceresna and I will be back as Macro Voices continues right here at MacroVoices.com.

Now, back to your hosts, Eric Townsend and Patrick Ceresna. Eric, it was great to have Luke back on the show. Always great to get an update on his insights. Patrick, let's hit the trade of the week. Luke's financial repression thesis centers on being long gold and Bitcoin while shorting long duration treasuries. The macro thesis is clear, but we're talking about instruments with different contract sizes and other complications. Please give us your best.

on how to put that trade on and i mean exactly including the tickers listeners you're going to find the download link for the post game trade of the week in your research roundup email

So Eric, I wanted to go a little deeper into that financial repression trade that Luke shared. The basic idea is to be long gold and Bitcoin against a short position in long duration treasuries. Now for... asset managers simply owning physical gold and bitcoin you can easily pair the position with an etf like harley bassman's interest rate hedge etf which is the symbol p-f-i-x now i wanted though to focus

on the leverage trader who can put on all three legs directly in the futures market that's a very capital efficient way but it requires discipline and contract mechanics including understanding expiration cycles planning your roles, factoring in role costs, and dealing with liquidity.

Now, I'm going to focus today on using the December 2025 gold futures contract, which is the symbol GC, the December 2025 Bitcoin futures, symbol BRR, and the December... 2025 ultra treasury bond futures symbol ub now you can see the breakdown of the trade on page two of this week's chart deck now with close to 90 days left on these contracts a trader has to build into their trade plan a quarterly role and potential rebalancing

Now, the real art is in the sizing. Do you size based on notional exposure or do you volatility adjust in a more of a risk parity framework? The math is pretty striking. Bitcoin's volatility runs dramatically higher. about three times that of gold and roughly four times that of long bonds. That means if you really try to equalize risk across the trade in the risk parity framework, you'd need a much larger treasury short against a relative. small Bitcoin position. In this example

we will size gold roughly three times the notional exposure of Bitcoin. So for a combined $1 million long exposure, that works out to about a quarter of a million dollars in Bitcoin.

roughly two BRR contracts and about $750,000 in gold around two GC gold contracts. Now against... that one million dollar long basket the vol adjusted hedge would be about 1.75 million dollars short in treasuries which translates to roughly being short three ub contracts now my own take on this is that it's a very volatile and messy pairing and it comes with considerable volatility risk.

Personally, if I was running this with a lot of leverage, I'd be thinking about tail risk hedges on top, whether that's through options or other overlays just to keep the drawdowns contained. That explanation worked for the pros, but we don't have time to delve into all the details of a retail version of this trade. So how about giving our retail listeners the quick 10,000-foot overview?

For retail investors, particularly for traders without access to futures, one of the biggest obstacles is not having access to a prime broker. Short selling can come with all sorts of extra margin requirements and costs. Especially.

if you're trying to express the trade through something like the tlt this is where i think options can become a powerful tool by using deep in the money options as a synthetic you can replicate the position in a risk control way with smaller capital requirements and without traditional short selling margin headaches.

Patrick, every Monday at Big Picture Trading, your webinar explains how retail investors can put on our most recent trade of the week. For those listeners that want to explore how to put on these trades in greater detail, don't miss out on a 14-day free trial at BigPictureTrading.com. Now let's dive into the postgame chart deck.

All right, let's dive into that chart deck. Now, listeners, you're going to find the download link for the postgame chart deck in your Research Roundup email. If you don't have that Research Roundup email, it means you have not yet registered at macrovoices.com. Now, just go to our homepage, macrovoices.com.

and click on the button over Luke's picture saying looking for the downloads. Okay, Eric, what are your thoughts here on equity markets? Well, a few notables, including a Goldman Sachs trader that was kind of pimped up on zero hedge or calling the top here. This is it.

Okay, they could be right. As we've discussed over several recent shows, this market is way, way, way overextended and overbought on a technical basis. A very significant correction could happen at any time. There's lots of reasons to think news events could bring it about. But I think that the run it hot thesis still makes perfect sense. As Luke described, policymakers are boxed in a corner and the only obvious way out is financial repression and secular inflation.

Bottom line, I have very little directional conviction right here, but frankly, I'm pretty darn confident that whatever comes next won't be boring. I'm not trying to trade this one. If I were, it would be a long straddle on e-mini S&P futures. well eric what i do agree with you is that volatility is coming back in now one of the reasons we're going to see that is there was a very large september option expiration that just happened last week so now the market has unpinned

from all of that gamma at the same time it's quite overbought and there's no denying that this bull trend has been so strong but from a perspective of the length and magnitude of this rally that we've come off the liberation lows for this decade this has now been the longest and the largest in magnitude rally without a five percent market correction and while at any one moment the stock market can continue in a bold trend there's simply no technical breakdown one has to recognize

that we are in the ninth inning of this run and inevitably some form of a correction is going to get underway. Does it have to be like a boogeyman market crash? No, but corrections happen often as many times as... four times a year. And so us getting some sort of a reversion from this really amazing bull advance would be incredibly normal. So what are we looking for, for signs at this?

market correction may be underway. Well, I think we have to look a little bit deeper under the hood. The one thing I have here on page four is a chart of market breadth. And what we've seen in the S&P 500. is that while it held at 52-week highs, the deterioration of the market breadth approached 50%, where literally one out of every two stocks in the S&P 500 was already downtrending.

So we're seeing a deterioration of that breath. At the same time, we're now seeing a less and less of the mag sevens rallying. And while we do have a few of them that actually had great impulses, many of them are stretched and some like. Amazon are outright rolling over. If we see the mag sevens start to roll over and also if the financials make a break, you can literally go to the XLF and just draw a trend line along its previous lows and see if we're going to get some sort of breakdown.

and the Mag-7s rolling over. it's going to be very hard for the s p 500 to stay up just because of the sheer market cap weighting of these giants in there now ideally i'm going to be watching to see whether it is more of a sector rotation rather than a risk off of everything down, particularly if we see things like some of the defensive sectors start to rebound, that would be signs that some sort of a corrective move is underway.

From a technical perspective, it's as simple as watching where that 50-day moving average is because it lines up with the Fibonacci retracement of the post-jobs number rally that we've had as well as where all the... highs from july and august formed and if we started to see price action fail at those points it would become a clear indication that some sort of a distribution cycle has kicked in it's very important to see more technical

damage before calling a turn. Why is that? Because there's so much systematic trading out there, whether it's ball targeting funds, whether it's CTAs or whether it is just short gamma on dealers books.

need a deterioration in the price in order to create that snowball effect of lower prices beget more selling and it creates that negative feedback that basically causes the stock market to have one of those deeper drawdowns and so it is insufficient for there to be just a hundred point pullback it needs to be a little bit deeper in order to create that negative effect

are we in the midst of that well a number of measured moves are done on the upside so and this has been such an extraordinary rally that at some point here we're just going to end up seeing just from exhaustion some profit taking kick in let's see if this is the week where it all begins all right eric let's move on to the dollar

Well, given this week's feature interview topic, I'll zoom out to the longer term picture on the US dollar this week. My predictions of several years ago now were that Brent Johnson would first be proven right on his long dollar calls, but that eventually... Luke's secular bearish dollar view would play out and we'd enter a secular dollar decline. Now, it's too early to say decisively that I got that call, right? But my strong sense is that I did. Brent's dollar milkshake scenario.

did play out just like he said it would. We saw a massive rally in the Dixie all the way up to 116 that nobody thought was possible. I think now it's Luke's turn. I think it's time for Luke to be proven right. And that means a much lower Dixie. My next major target lower is 89. But if Luke's really right that we're going from the slow part to the fast part. accelerate, then 89 is just the first step on the way down.

well eric going back to july we had an attempt on the dollar index to break back above its 50-day moving average it spectacularly failed and we saw throughout the summer a breakdown for a complete double bottom retest of its july low and so now a complete retest of its june low but now that that held in the post fomc period we now have seen the dollar try to work its way back

above the 50-day moving average and above what i consider a critical level around the 98 level now what is interesting about this well the dollar bear has now been you know eight plus months in play and it is is very consensus and now I while I'm not necessarily bullish on the dollar what I do recognize is that it's incredibly oversold and everyone is relatively short the dollar in terms of positioning so

Any sort of a squeeze here could create that counter reaction. Now, I don't want to already call it because we haven't yet seen key technical levels broken, but any sustained price action north of 90. for multiple days will certainly at minimum have neutralized the sell cycle and would put the trade range that's been established over the summer back in play. All right, Eric, let's move on to crude oil.

Patrick, WTI moved back above its 200-day moving average for the first time in a month late Wednesday. More importantly, the XZ spread, that's the November-December WTI spread, widened back out to about almost 60%. almost double what it was a couple weeks ago, that may suggest that front of curve backwardation may have bottomed. And to be sure, I'll be watching structure closer than flat price as I try to gauge what comes next.

Well, Eric, to me, what's actually important is that overall, over the last month, there's been generally negative news, news that would typically have caused bears to have a window to take oil prices lower. But yet throughout. August and going into September, every time oil is sold, it held the line around that $61, $62, $63 level, establishing a base which is very close to the Fibonacci retracement zone.

of that May to July rally. So now we see oil strengthening back above that 50-day moving average. What I particularly like about oil is that nobody really is interested right now with gold and uranium and uh and ai stocks all ripping oil has been left for dead but really to me this is what the kind of a backdrop where i get super bullish because

When nobody's paying attention, but the price starts behaving in a more bullish way is what sometimes when the most asymmetry exists. Let's see whether or not oil can build on this and actually break above the $66 level.

which I think would be quite technically significant. All right, let's talk on gold. Patrick, I agree with Luke Groman that investors would be crazy not to be satisfied with the amazing returns we've already seen on gold. And despite that we are now seriously overbought and ripe for a correction on a technical basis.

the long-term fundamentals couldn't be more bullish. So I'm in total agreement with Luke Roman on those points. But what came to mind for me when I heard Luke say gold and Bitcoin investors aren't complaining about this market was actually that I remembered Rick Rule's wisdom that this raging gold bull market is nothing to celebrate, even for us gold bulls who are profiting handsomely from it.

The reason gold is ripping higher is that the world is going to shit. And the same slowly at first, but then all at once phenomenon applies there too. Now, I'm staying long here because I'm a trader and I don't think this trade is done. But I can honestly say that I would much prefer an outcome where I lose a considerable percentage of my net worth on the gold trade because it turned out...

out that, oh, in the end, actually all my geopolitical concerns were overblown and it turned out to be a false alarm. Crappy returns and even a huge loss still beats the heck out of World War III in my book. And I'm going to take this opportunity, Patrick, to say that I now believe that this period we're living through right now will ultimately be recorded in the history books as the time when the Second American Civil War broke out.

Civil war is never an isolated event. It's an escalation of an out-of-control political division. And that's exactly what we're living through right now. To be clear, I am not saying that Charlie Kirk's murder or the shootings that occurred in Dallas at the ICE Detention Center or any of the other violent actions taken by any individual evidences the outbreak of a civil war.

That's crazy. Those things do not evidence that. Crazy people do crazy things, and that applies to both sides of the political divide. And there certainly have been violent events perpetrated by both sides of this political division. The reason that I'm going to call September 2025 as the month the second American Civil War began is not the actions, but rather the reactions.

Any of these events could happen at any time, but for both some parts of the corporate media, and some elected officials to publicly take the position that some of the people killed in America in crimes had it coming, or that maybe it's the government that's to blame for having policies that are so unjust that these crimes... were actually legitimate acts of justifiable violence. That's the signal that we're getting right here. What we're seeing is not...

the actions of individuals. That's not an important signal. It's the reaction of the news media and the elected public officials that are not saying violence is always bad and crime is always bad. They're saying, some of them at least are saying, maybe this is justified. And I want to be super clear on this. I'm not taking sides, at least not on the podcast. What I'm saying is that this is not unprecedented.

In civil wars, what happens is elected officials and media who in normal times unconditionally endorse peace and only peace are now saying openly that the circumstances have escalated to the point that they feel that they really are at war. And many of them are saying openly that violence is justified in the interest of correcting the injustices that they perceive to exist in today's society.

What usually happens next is that political parties are transformed into warring factions who eventually go to literal armed conflict against their own countrymen because the political or ideological divide became so extreme. that they felt violent conflict was the only remaining option.

Strauss and Howe's work on the fourth turning, or Kondratiev Winter if you prefer that terminology, is very much in play here. This is what happens in fourth turnings. The tail end of it is the worst, and the last fourth turning before this... This one culminated in World War II. Charting dates on a cycle with 80 to 100-year periodicity is tricky business, but my best guess is that this fourth turning will end sometime between 2029 and 2034.

American Civil War II is something that the vast majority of Americans and the rest of the world can survive.

Nuclear World War III is not. And frankly, the biggest question on my mind is which of those two events will be the culminating event that ends this fourth turning. All of this is massively... utterly bullish gold long term but i've honestly never hoped ever in my life more to be proven wrong humiliated publicly and lose money in the process than I do right now on my overweight gold long, because it simply does not make sense to stay long gold here and not take profits unless you have any.

extreme view as to what could happen next and the degree of geopolitical. as well as financial and inflation risk that exists in the system. I think Luke did a brilliant job in his interview. This is something that I've been thinking about for quite a while as to when I would say on the podcast that

I think the second American Civil War has begun. And I feel that Luke's interview that he gave set the stage perfectly. I think he explained it probably better than I could. That's what I think is happening. And I sure hope I'm wrong.

Well, Eric, I just want to look at gold purely from a technical perspective. And what we have is an extraordinary bull market where every dip is almost immediately bought. Now, there are all the measured moves technically that measure all the way up to 30%.

$3,900 to $4,000. So there is nothing stopping gold from tacking on a couple hundred bucks to the upside. But this is a balancing act of the long-term outlook going at one or two years where gold being north of 4 000 is probably a very high probability outcome versus the short-term technicals as to where is their short-term drawdown risk and buying opportunities on pullbacks

Overall, the price action has been relatively positive. But the bigger question is that what will happen if the broader intermarkets get all wonky? Imagine a scenario that the market is not expecting.

rallying the stock markets going risk off and going through some sort of correction the bigger question is can gold stay isolated and march to the beat of its own drum or will it succumb to intermarket forces and then be dragged down with it into some sort of a correction that in the bigger picture is quite insignificant to gold but on the short term anyone who's highly leveraged will feel a little bit of stress on their gold positioning

Overall, I remain quite bullish gold, but really this is a period where you should be focused on buying dips and not chasing rips. And at this moment, even if gold got up to 3,900 or 4,000, I would almost certainly be actively using option overlays to secure those prices on any advances up there. All right, Eric, let's touch on uranium.

We got a really, really important signal this week. On Wednesday, spot uranium was up, but the uranium miners were down, and there's usually a strong positive correlation there. across the board. Now, to give credit where it's due, both Patrick and our good friends over at UraniumInsider.com have been pounding the table for the last few weeks, saying the only thing left in the nuclear space that's still cheap was Sput.

That's the one that invests directly in the uranium spot market. And what Patrick has suggested and what our friends at Uranium Insider have suggested is, OK, guys, the uranium stocks, the miners, they already had their run on speculation. It's time for a rotation out of those more speculative uranium miners into Sput because that's what's still cheap here. And that's what doesn't need a retracement before it moves considerably higher. I think Patrick and our buddies over at Uranium.

insider.com totally nailed that call this is where spot uranium finally catches up to and surpasses both term price as well as its prior high. I also described the self-reinforcing aspect of that virtuous cycle of Sput being at the money. That's in my Twitter feed if you're interested. And yes, ironically,

That could spell a sell the news event on the more speculative miners that have already seen their big move to the upside. Now, I should confess that despite the fact that I just endorsed that recommendation to rotate out of the miner.

into sput and i didn't do that i just kept all of my mining shares and added to my sput position that clearly increased my risk at a time when the market has already had an incredible run and i am not worried i'm in this trade for the long haul if my uranium mining shares dump in reaction to calls for a broad market top and reversal or who knows whatever else happens i guess i'll just have to learn to play the drums like dr michael berry did in the big short

I am that confident that the uranium and nuclear trade has only just gotten started in big picture terms, but it's already come too far too fast, so a correction would make perfect sense, especially if broad market weakness is the catalyst. So first off, let's talk about uranium itself. The spot prices just broke out and things like the spot physical, like you suggested, are just beginning to break out. I think there's lots of room in those closed end.

funds that hold uranium itself to have upside but the bigger question about uranium stocks in my mind is how correlated or how influenced would they be in a correction in the ai space because a lot of times the ai investors are also pairing the uranium long stock positioning in the same theme of energy consumption and my curiosity is whether or not a correction that kicks in in the ai space

would lead to profit taking on many of these uranium stocks that had just an absolutely extraordinary multi-month run here on the upside. That is certainly the thing to watch. Now, Eric, we do have to talk about copper here. Patrick, it's ironic that even I occasionally learn something from listening to macro voices. I told you guys a couple of times in the last few weeks that I would be sorely tempted to add to my long copper position, but, you know, it's already...

pretty seriously overweight and it would be crazy to add more. Well, guess what? Listening to the last couple of episodes and our expert guests opinions really confirming that long copper view persuaded me to add considerable size this week to my long. HGZ6, that's Hotel Golf Zulu 6. That's the futures contract that's December 26, not 25. And I did that after realizing that rebalancing just my gains in golden uranium justified more size just for the...

sake of rebalancing. At least that was my rationalization. So it was only pure dumb luck, not skill, that I happened to increase my futures position on copper by 50 percent just hours before Freeport-McMoran declared force majeure. the wake of a serious accident at a copper mine in Indonesia a couple of weeks ago.

shock panic uh whatever you want to call it move took us back above the 200 day moving average and just eyeballing the chart if this rally can continue that's a big if because we need to see uh this signal translate into a real recovery not just a quick panic reaction to news that retraces but if we stay above the 200 day moving average it will and if we can keep the rally going a little more than that it looks like we're going to avert

what otherwise looked like an impending death cross on the daily chart. The market tested the 50-day moving average on Wednesday, but still closed below it. Now, if we can get above four spot 90 or so and stay there, and that number that I'm quoting is on the December 25 chart, Hotel Golf Zulu 5.

On that chart, above four spot 90, if we can get there and stay there, then I think the long overdue recovery in copper may finally be upon us. And it definitely comports with Luke's view that they're going to have no choice but to run this economy hot.

Well, Eric, it's awesome to hear that you got a good positioning there on your copper things. We did talk about that copper trade very timely last week as a trade of the week. And so it's nice to see that any listeners that were acting upon that had a great start to that trade. now overall copper here has lots of room to go back up to that kind of five to five and a quarter range and so at this moment with this kind of a great tailwind there's lots of room for copper to strengthen

here in the next couple of weeks or month ahead. Patrick, before we wrap up, we usually hit the 10-year Treasury note chart. I don't think you can skip that one this week in wake of Luke Groban's interview. What do you think and how does it comport with what Luke told us? While we saw yields break down towards 4% before the FOMC, really Powell did cool things off in the rates markets and bonds have weakened and subsequently yields have risen.

and we're now actually testing some pretty key levels i think this kind of even 420 425 yield area is going to be very important if the primary trend is now lower yields this should be the resistance level on yields and we should see them start to weaken from here and if for whatever reason yield strengthened above these levels it would have to be acknowledgement that something has changed in the rates markets and we'd have to then see

whether or not retesting of highs would be on the table. Right now, I'm actually anticipating this to fail at this level and weaken. And let's see if this overhead resistance does, in fact, stall things out here.

Folks, if you enjoy Patrick's chart decks, you can get them every single day of the week with a free trial of Big Picture Trading. The details are on the last pages of the slide deck, or just go to BigPictureTrading.com. Patrick, tell them what they can expect to find in this week's research roundup.

In this week's research roundup, you're going to find the transcript for today's interview as well as a link to the trade of the week and chart book we discussed here in the post game, including a link to a number of articles that we found interesting. So 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 the program even better. Now, for those of our listeners that write or blog about the markets,

like to share that content with our listeners. Send us an email at researchroundupatmacrovoices.com and we'll consider it for our weekly distributions. If you have not already, follow our main account on X at macro voices for all the most recent updates and releases you can also follow eric on x at eric s townsend that's eric spelt with a k and you can also follow me at Patrick Ceresna. On behalf of Eric Townsend and myself, thank you for listening and we'll see you all next week.

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