MacroVoices #505 Michael Every: Does Anyone Remember PMIs?

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 505 was produced on November 6th, 2025. I'm Eric Townsend.

RoboBank's Michael Every returns as this week's feature interview guest. We'll break down the geopolitical situation and talk about what it means for markets. And Michael will have more to add to Brent Johnson's comments last week about the role of U.S. dollar stablecoins in the global financial system going forward.

Then be sure to stay tuned for our Trade of the Week segment right after the feature interview when Patrick will present a pairs trade to fade the AI-driven South Korean technology stock rally. And I'm Patrick Ceresna with the Macro Scoreboard week over week as of the close of Wednesday, November 5th, 2025. The S&P 500 index down 136 basis points, trading at 67.96.

It's consolidating off of last week's new highs. We'll take a closer look at that chart and those key technical levels to watch in the postgame segment. The U.S. dollar index up 80 basis points, trading to 99.92. The December... WTI crude oil contract down 146 basis points trading at 59.60. December Arbob gasoline up 265 basis points trading at 194.

The December gold contract down 20 basis points, trading at $39.92, remains above its 50-day moving average as it has found short-term support. The December copper. contract down 532 basis points trading to 498 the uranium down 296 basis points trading to 78.75 and the U.S. 10-year Treasury yield up five basis points, trading at 413. It's going to be a light week next week on the key news as the government shutdown continues to leave a lot of that economic data in limbo.

This week's feature interview guest is Rabobank's Michael Avery. Eric and Michael discuss the U.S.-China geopolitical tensions, economic statecraft, stablecoins, and the emergent challenges and opportunities. Eric's interview with Michael Every 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 Michael Every, Global Strategist in Economics and Markets for Rabobank, or...

Rabobank, if you prefer. Michael, I'm so keen to get you back on the show. I loved something that you wrote recently when you said, does anybody remember PMIs? Remember when that was what everyone was focused on? It seems to me like the... combination of political, military, and economic statecraft and posturing and positioning and so forth.

has hit fever pitch over the last month. I'm certain that it's really important to markets, and frankly, it's above my pay grade. I'm so glad to have you back on. the overall assessment of what's going on in terms of statecraft, politics, and so forth that's going to affect markets, and how should we interpret all these interesting news events of the last month.

Okay, well, thank you very much for the opportunity. We've obviously got the whole world to cover there within that introduction. We can bullet point it that the primary driver is still the US. trying to reinvent itself and changing the world around it by doing so. The reason for it doing that is still above all China in the simplest possible terms. But we have a panoply.

of really eyebrow raising developments over the past couple of weeks, which I want to just run through briefly before we get to the main event, which is, of course, the Trump Xi Jinping meeting that we had recently and the outcome from that. Let's just consider that a month ago I was speaking to clients and writing an editorial about it. And I said, economic weapons are things that you need to be looking for or new forms of weapons. And immediately afterwards.

China announced export controls on its rare earths or further export controls and said that no one was allowed to use them anywhere if they went into military supply chains. And given that you have to have them in order to build that equipment, effectively China was saying no one anywhere except here. or its allies, would be able to build any military equipment going forward. That's rather a game changer, if you consider it. We had the Dutch government...

seizing a Chinese-owned chipmaker, Nixperia, which was about to be asset-stripped by its parent company, and which then cut off chip supplies to the EU in response. We've had three EU oil refineries which take Russian... fuel suffering mysterious explosions

The US dangled more military aid for Ukraine and then pivoted at the last minute and sanctioned Rosneft and Lukoil, although physical enforcement there is key. Russia brandished a new nuclear weapon, just going straight to real weapons. The US has restarted nuclear tests.

The US is talking about regime changing Venezuela very clearly. Trump has suggested he could move on Nigeria and now potentially move into Mexico too. So that's just a smattering of what we've seen. And on top of all that, in Europe, we've had... The former head of the ECB and the current head of the ECB talk about how Europe should run its political system, saying that it should be majority voting rather than everybody having to agree to everything. Where's that in a central bank mandate?

We've had the European Commission president, von der Leyen, laying out green tech policies that very strongly imply we're going to have non-tariff barriers. So basically made in Europe for all public tenders, which is 14% of GDP. Capital controls to screen FDI so it's in the European Union's interests. I presume that's coming in and going out, in which case you can stop people investing in other countries you don't want them to.

and tariffs and subsidies to support key sectors and on top of that they threatened to put their anti-coercion instrument into play against China which is a trade bazooka although it's never been used. And the rumor is that they're going to completely remove or change all their legislation for financial markets regulation. And the number of acronyms I could run through there is almost endless.

and basically lift everything up to the EU level rather than the national. So that is just a gobsmacking backdrop. And that was before Trump swept through Asia and did a series of trade. and FDI into the US, by the way, and defense deals, and of course, centered around rare earths, gathering a cluster of economies to his side versus China and getting Japan and South Korea to say they would help with shipbuilding in particular.

And then he sat down for that meeting with Xi Jinping beforehand, tweeting, the G2 will be convening shortly. The G2. There's 193 countries in the world left out. Let's then turn to that Trump. Xi meeting. Did we get a G2? And in very, very short form, no, I don't think we got a G2. I think what we have here is a ceasefire to rearm, if you will, quite literally.

And it's not any kind of peace deal in the longer term. In the longer term, I think we're still heading for a 2G, which is not the G2 working together, but the world with two different groups, the US-centric group. and the chinese-centric group but we are going to have at best a year's interregnum where we basically okay wait and see who can have the better cards a year from now so that we get a relatively

easier ride in markets for the next six to 12 months. Michael, if you've been sitting enjoying the Caribbean sun for months and months and all of a sudden there's a monsoon and then it doesn't stop. you have to consider, okay, there must be some seasonality to this. Oh, it's monsoon season. You eventually figure it out.

You've been a master of interpreting economic statecraft. It seems to me economic statecraft is something that was subtle and seldom used until fairly recently. And from what you've just described, We've got so many things going on at once. How do you interpret that big picture? Does it mean an economic war has begun? Does it mean that?

We're just going through a phase here that gets resolved. Once we get to a certain set of Trump and Besant policy goals, then it's all going to settle down. How do we interpret the big picture? What's the big thing that's just begun and how long is it going to last?

That's a great question. And to be honest, it's really up to the listener to decide for themselves because many people will view what we're seeing right now as an aberration. And the long run trend is that everybody just wants to trade and get along. I think that's pretty much the normal view in markets and in most economic circles. I disagree. I think everything is always about power at the end of the day. While everyone's got a stable power balance globally, everyone will focus on markets.

the hegemon starts wobbling while everyone starts putting in their bets to see who's going to be the next leader. That's still the game I believe is playing out. That's going to play out probably for the rest of our lives. It's a very, very... slow-burning process because neither China nor the US is going anywhere. And both of them clearly have a very strong hand. Both of them have an enormous number of tricks which they can use.

to try and give themselves the advantage. So, you know, short of an actual shooting match, which some people worry about, I think directly between the US and China is relatively unlikely. This is going to be the new normal going forwards, but it is happening. across geography, across asset and across disciplines in a way that most people are having difficulty drawing together. Some parts of it are more obvious than others, but there's almost nothing going on that matters that isn't in some way.

tied into this and so if you see it the way i do kind of everything points back to it and if you refuse to accept that fundamental precept which many people do you know i i'm i'm pointing to things that aren't there and in reality we just have a lot of random shocks but

If that is the case, why are very easy to predict things like Trump talking about regime change in Venezuela, which not many people had on the cards 12 months ago, but I did. Now, headline news. Why have we seen just in the past few days? rumors that the US wants to openly dollarize other economies, which of course would include Argentina, I would think. I mean, that's been floated before, but I don't think it's a coincidence that all of this is coming back right now.

As in the background, you know, China is trying to do currency deals with other people and both sides or both blocks are trying to feel out who's on whose team and in what new set of rules.

Going back to the Soviet era, there were really two axes of power in the world. There was the West and there was, you know, the whole... Russia controlled the Eastern Europe and so forth. They basically didn't trade with the West, and they couldn't trade with the West in many cases. Are you saying that we're going back to that kind of bifurcated global economy where there's the America-centric?

West and the China-centric East or whatever you want to call the China-centric pole. And we get toward a global economy where there's just not as much cooperation and everything's living in two sides of a wall. Well, that's your worst case scenario. And I think that absolute worst case is unlikely in that.

there are going to be different categories of goods, some of which people have no problem trading. For example, if China is going to make novelty toilet roll holders, I just don't see that the US is going to have an issue buying them. You know, there are advantages to making many different things and manufacturing in general is an advantage full stop. But I would think if you're specifically...

talking about that product category, very few people in the West would say we're going to fight tooth and nail and use economic statecraft to get that back, you know, talk about them. But all the big strategic sectors which have direct national security... key industrial energy telecoms or military implications all of those over time we are already seeing a bifurcation happen between different technology sets

and production supply chains and the logic is that this doesn't only point to downstream products it's everything all the way upstream that's what we're seeing now where the us during this one year pause in you know escalation with china is desperately running around the world trying to find new rare earth supplies and refiners so it doesn't have to go back to China a year from now. And China, for its part, is desperately trying to...

make sure that everywhere that the US currently has the whip hand, for example, the highest end chips or in software or in aircraft parts, that it can catch up. And a year from now, it can say to the US, look, we just don't need any of your stuff anymore. So it's a dynamic process and there will be things, yeah, where you can carry on pretty much as normal. But I think everything that matters is going to shift over time, even if it isn't done in a synchronized fashion.

What I don't understand about your explanation is just how it's possible that the U.S. would be leading this charge from such a weak opening position. I mean, it seems to me there's been economic bloggers that have been... complaining for decades now, or certainly for the last many years, about the number of things that we are sole source dependent on China for, from our medications to rare earth elements to a zillion. million other things. This is very widely known.

If you know all those things and you want to get into a competitive, hot and heavy negotiation, I would think the first step would be to quietly shore up all of those vulnerabilities, figure out, you know. Play nice, smile and be happy with China and shore up all those vulnerabilities to put yourself in a very strong negotiating position. Then start talking tough. It seems to me, Michael, like Donald Art of the Deal Trump.

is doing it backwards. And I think he knows better. So I don't get it. I don't think that Trump was in the position to be able to do what you're suggesting. If he were, then he would have done exactly that. We have lived through decades, I mean, not just years, decades, in which not just the US, but Europe and every major Western economy has done everything it can to get rid of all its productive potential and to shovel it offshore.

It was absolutely the norm. That's how you made your money on Wall Street. That's how you got a nice slush fund if you're a politician. Just ensure that you offshored absolutely everything, sliced up the value chain into a million different pieces and very, very few of them were still within the US.

And everyone was happy. Now, you can say that was a utopian view that if we did that, we'd have no more war because everyone's integrated together. And I won't rule out the fact that some people are idealists doing it.

I think far more people just simply didn't care because they were getting paid. And I'm not trying to offend people saying that. I just think it's an objective truth. And there are still a lot of people who are either useful idiots who can't see the way the world is now or are still getting paid to do the wrong thing.

You can see headlines around you every day of people still not understanding the importance of the geopolitical moment and the geoeconomic moment and repeating past errors. So Trump would love to have gone in there. guns blazing because he had all the guns and all the ammunition that was never going to be possible now the US still has a lot of weapons a lot of very good cards absolutely let's not forget just how significant they can be

But it doesn't have those things like rare earths where China absolutely still has the whip hand. So we're now in this strange Mexican standoff where different kinds of weapons are being brandished. against each other so china has those rare earths it also has pharma as you correctly pointed to and frankly has the supply of almost every physical product

But the US has control of the financial economy, which does still matter for now, even if I think physical production outranks it, you know, in any kind of military conflict. It certainly does. And as I also said, it has high-end software, it has top-end chips, and it has aircraft. It has various different things which do still count. And the US consumer.

China must keep exporting to keep its economy moving forward, given how weak domestic demand is. So the US is kind of agreeing to continue to keep buying from China while it tries to decouple from China. It's a very difficult process.

for anyone, whether it's Trump or anyone else, to deal with. And he has to basically remake the US economy, the Chinese economy, the world economy, everything all at once in multiple dimensions. It's a staggeringly difficult ask whether you're into the art of the deal or not. Well, let's unpack this in terms of your take on...

where it stands and who really has the strength, because frankly, I want to hear that the country I was born in, the United States, is going to come out on top of this thing. But what I think you just told me is. China is in a position to say, look, we're going to withhold all of your prescription medications. You're not going to have any medications. You're not going to have any rare earths to make your weapons with. We're going to withhold a whole bunch of other products.

We've got you by the short hairs, United States. Don't mess with us. And the answer is, oh, yeah, we could withhold iOS version 26.1 and not let you have it for your iPads. Look, there was an element of that. That's what it sounds like to me, Michael. Tell me more about our strength here and how we're going to say, Chana, you better not.

play any games withholding our medication because we've got a stronger hand than you do. Help me understand that stronger hand. Okay, well, let's get to the good stuff first of all. Let me repeat what I just said, because I was saying a lot of stuff fast because I've got so much to get through and I don't want to leave key things hanging. So one of the first ones, as I said, is that the Chinese economy, because domestic demand there is relatively weak.

And that's part of the structure of the system. It just invests too much. That has to be exported. And if it can't be exported, you do get problems. For example, China's banking debt, the GDP. or bank liabilities to GDP is vastly, vastly worse than in the US. Chinese government debt.

is also pretty high trust me it's not that it's not that much better than the us when you really deep ground and the long grass but their private sector debt is far worse than in the us so from a debt to gdp perspective If they don't get the inflow of capital coming from abroad, from exports, all kinds of bad things can happen, even if they have capital controls and a largely state-dominated economy. There's only so far you can push that paradigm. So that's one weapon.

In one level, okay, you can mock some of the software, but some of it's very important. Very high-end chips are important. Aircraft is still important. But here's where I want to segue into one other thing. At the beginning, you very correctly said, political statecraft, economic statecraft, military statecraft. The political side of it is, can we make a deal? And that was, you know, can we get a G2? And the answer is no, no, we can't. So if we can't do that,

We can try and use the economic statecraft and the US currently is. It's trying to change itself. It's trying to change China, which is very hard to do. It's trying to change its allies because if it's the US plus Europe plus Canada plus Mexico plus Japan.

plus South Korea, plus Australia and New Zealand, plus the UK. You start putting those economies together and all the oil in the Middle East, or most of the oil in the Middle East, and that's a very, very different ballgame. But where that links into my next point.

is that I think the US is going to have to, over time, and maybe sooner than people think, if it isn't happening already, really start thinking, well, what about military statecraft? Because China may have this magnificent production machine. And it may be rearming or arming at the fastest pace anyone has done since World War II. And very soon we'll have a much more powerful navy than the US if it continues on the current trajectory. But for the moment, it doesn't have global projection.

of any of that, not seriously, not in the way that the US does now. And it's deeply reliant on resource imports from all around the world, from Africa, from Latin America, from the rest of Asia, from Russia. from Europe, et cetera, et cetera, you name it. The US is in a position to block those flows. Now that takes us to the realm of economic warfare, or as I said, actual military warfare. But when you start looking at Trump talking about regime change in Venezuela,

for example, dollarizing Argentina, which of course sells stuff to China, what we saw versus Iran in the Middle East a few months ago. This is exactly what you would expect to see as part of a grand macro strategy from the u.s perspective which is to say if we've lost the game on this front in the time it will take us to try and build up our resources again to try and go at warp speed to get rare earths and industrial production

and onshoring and factories via tariffs back, we have to make sure China doesn't have an easy time of it either. You know, we will do all that we can to physically disrupt some of those commodity flows. in areas where China can't do a lot about it. Like Nigeria, for example. Okay, so Nigeria's oil. What happens if Nigeria can't export oil? You start going down the list of places that export things to China and thinking, how could you disrupt them?

And that's what I suspect we will start to see emerging next. And we're already seeing that happen vis-a-vis Russia. I already mentioned the three oil refineries in the EU which deal with Russian oil flows. all mysteriously exploded within a week. That happened a couple of weeks ago. Don't tell me that's coincidence and market forces.

Okay, but let's talk a little bit more about these military risks, because from the things that you just described and some of the weaknesses or limitations. that you describe China as having at this time. It sounds to me like a close alliance between China and Russia. would overcome most of those things because Russia has a lot of those needed natural resources. And from what I understand, the U.S. is really kind of in last place on hypersonic weapons. So these super fast missiles.

that can hit the target faster than any intercept or defensive system could possibly stop them. From what I understand, Russia has enough of them already that, you know, if it really came to blows, they could potentially do a simultaneous, you know, take out all 10 of the US's aircraft carriers in a single attack.

and neutralize that force projection capability completely. That obviously would start a nuclear exchange and probably end humanity, so I really hope that it doesn't happen. But it seems to me that China and... Russia together both economically and militarily are a force that I'm not sure could be reckoned with and it seems to me that we've done a lot to encourage rather than discourage that kind of alliance between China and Russia.

well let's take that piece by piece because there's a lot to unpack there we're talking about the end of the world as we know it right well that's i'm hoping we're avoiding it Yes, it's not a topic I brought up. You did. But once you play the nuclear war card, it's a bit difficult to know where to go next. But I honestly don't place a particularly high probability on that because I think both sides are rational.

And much as we saw during most of the Cold War, except for a few flashpoints, that's, I'm sure, something both sides want to avoid. Okay, so let's compartmentalize that. But isn't it true, though, that China and Russia jointly, to assume that they don't have as much military might together between them as the U.S. has by itself, I think is not only optimistic, but just dead wrong.

I think they've got much more military force and we need to recognize that reality. Let's be blunt. This is macro voices, not military voices, right? We can get people on here who can give a much more nuanced view who wear uniform. All I will say is that.

China is completely untested. It's spending a lot on lovely new equipment. We don't know how it works. For example, they don't really have a blue water navy yet. They can't project power anywhere on sea. They're starting to look at it, but they can't do it yet.

Well, bluntly, Russia can't even beat Ukraine with the West only half-heartedly helping it because the West is not all in on Ukraine in any way, shape or form. You know, Europe talks a good fight and does almost nothing, you know, in terms of physical flows of goods. And the U.S. has been helping. But, you know, Russia has struggled to even take Pogrovsk for a year. And, you know, tens of thousands of men dying just for a few square kilometers. So I think it's easy to overhype how strong.

in one dimension they are together but if you are talking about a nexus of resources and production yes absolutely and was it a geostrategic mistake at whatever time period and blaming whoever you want to to have accelerated the drift of those two countries together? Yeah, absolutely. And you can point fingers at lots of different people. But where I think the US response will now have to come, and again, it ties into what I was just saying.

is not just the very, very aggressive statecraft measures that we're seeing in the economy, which they really are quite remarkable, some of the shifts that we're seeing. And we haven't even got time to list through them all. And I expect many more radical ones to be coming over the next couple of weeks and months that will make people's hair stand on end. It's going to be building a block within, you know, under a US umbrella with Europe, with the UK.

with Australia, with New Zealand, with Canada, whether Canada likes it or not, with Mexico, with Japan, with South Korea, with a few others, with the Philippines, maybe with Vietnam. We'll see who else gets included on that list. And you put everything there together. in the West. And it's a very different equation. It's not the US alone. You know, America first doesn't have to be America alone, even if that's currently, I believe, quite a tendentious issue on the right of the Republican Party.

Let's break this down then into the macro trades and where it's all headed. Based on everything that you see, first of all, you mentioned some things coming that you expect. Are those specific things that you can tell us about, or are you just saying that there's more turbulence?

coming and based on what you think is coming where do you think the trends are going to be in markets? Okay first of all in terms of what I think is coming when I published a piece nearly a year ago now actually it was I think pretty much yeah just

almost a year ago to the day or a couple of days when Donald Trump was reelected. And I said that we were going to move towards statecraft. I explained very specifically how the taxonomy works. For example, you're going to put up tariffs and afterwards you'll find you'll have to put up

subsidies as well to match and then you'll have to have price controls in place we've already seen all of those happening specifically in rare earths we will see that expanded you are going to see subsidies on energy you are going to see change after change after change

being introduced in order to make sure everything gets to where it needs to go. And market forces will play less and less of a role within that. That's inevitable. We've seen the Pentagon turn basically into a hedge fund where it can leverage itself up 20 times to be able to spend more. That's already happened. Where we're going to move next, I think are capital controls.

that's going to start seeing where money can and can't go. We're going to drag the Fed into this. Absolutely, when we get new management at the Fed, it will be a very different Fed playing a very, very different game with huge implications for markets. And the currency will be dragged into it too because...

Dollar stable coins, the legislative framework is there for them now. Sure. They actually aren't out there in the marketplace doing much yet. When they are, that can absolutely reshape the entire. geopolitical and geoeconomic architecture again. So the really big stuff hasn't been done yet. All we've had is the first foundations of this new building in terms of the tariffs. And in China, we've got like a blueprint of what it might look like, but we'll come back in a year.

That's going to be a huge shock for markets when they start to hear and people realize what they do and don't do. Let's hear more about capital controls on whom and in post-how. Well, we already have emerging capital controls into the U.S.

Scythius is now screening things much, much more vociferously. Is this an entity we want investing in the US here? Alongside that, with the deals Trump just did on his roadshow through Asia. He's forcing allies like South Korea and Japan, and Europe will be next, and Australia, by the way, too, with their pension funds, to invest in the US.

forcing them to and specifying where he wants them to in areas that maybe they wouldn't want to. Maybe they would traditionally just want to buy the latest hot stock or a REIT. No, now you're going to open a factory here. Now you're going to open a shipyard here. Now you are going to do what we need to be done as a team to re-industrialize and get the military industrial supply chains going. The next phase of that, logically, which they've flirted with.

is to control where capital can go when it's going out. So we don't want you investing in this country or in that sector. We're nearly there. I can see that happening very easily. And the more radical one, which feeds into I think the next part. of the discussion on currencies and the Fed is, okay, do we just want foreign capital coming in and buying US assets like US treasuries and US debt?

Do we want the same global reserve status for the dollar and U.S. treasuries that we have now, whereby when people want to buy U.S. assets, that forces the U.S. to run a trade deficit? forces the U.S. to run a fiscal deficit, forces the U.S. to de-industrialize, and all of that is done to keep the dollar the way it operates now. And logically, the answer to that will be no.

So are you anticipating capital controls? And a lot of our listeners are institutional investors in Europe and elsewhere in the world who invest either significantly, if not predominantly in U.S. markets. One of the reasons for that. is because US markets are so inviting. There are no taxes on capital gains for foreign investors. Foreign investment capital is generally welcome in the US. You're saying that's potentially going to change?

Yes, absolutely. I want to make that abundantly clear because while the current system operates the way it does, that financial relationship... is an absolute corollary to U.S. de-industrialization, demilitarization, and gradual decline in terms of its global status vis-a-vis China. They are absolutely wedded at the hip. Oh, sorry, joined at the hip.

Even if people can't generally see that relationship, geostrategists can see it and describe it regularly. What I think you will see instead, there's a spectrum of possible outcomes you can get. And I don't want to specify exactly what part of it will apply where and when.

But I think you are going to get a lot, lot more of what we just saw, which is the US saying to key allies, this is how we want you to invest. You are not going to have a free choice. You're still going to make money. There's going to be a return. We're not stealing your money, but you are going to put it here and here and here to ensure that we have capital in the right areas so that five years from now, we are resilient as a group in order to do X, Y, Z.

Right now, it's rare earths. After that, it'll be many, many other things, many, many other industries, because we're no longer in a phase where you can just say because markets, which is a phrase I use flippantly at work all the time. I mean, frankly, who gives a damn about?

because markets individual investors sure i get that but there are games being played at a much higher pay grade than any of us on this chat or listening to it you know are involved in and they have particular outcomes they want to see and unfortunately

Or fortunately, depending on your point of view, I think markets will be moving from a world where they can do whatever they want. Let's call it a jungle where they can go wherever they want to a safari park. So, you know, you're free to roam around in certain areas. but you're now in a safari park rather than in the wild. And just count yourself lucky you're not in a cage in the zoo because that's the alternative and it's far worse.

What does that mean for the major stock indices? Because I don't know what percentage of the S&P 500 is domestically owned by Americans and American institutions, but a lot of it. And if there was suddenly, you know, tomorrow morning, everybody who who's not in a certain category has to divest their their index holdings, that would be hugely disruptive. So we can't have that, I hope. How would you.

impose this transition if you're not going to annihilate markets in the process. I'm talking flows, not stocks, to be abundantly clear. No one is going to put a gun to people's heads and say, we want you to sell off all your assets in the US. Quite the opposite.

They don't want to see a massive capital outflow, which, you know, was rumored, by the way, earlier in the year when the Trump plan started to be rolled out. You had lots of, you know, gnashing of teeth and wailing and hair pulling and people saying, I'm selling everything US. If you look, actually, capital is flowing back into the US big time now.

OK, it's AI centric, but even treasuries aren't doing too badly again. You know, everyone who was panicking has had to reverse over a few months. But you don't see many mea culpa headlines in the financial press saying we called it completely wrong. And actually, statecraft can drag in capital. But from the flow perspective, you know, I don't want to keep repeating myself. You can't have a US versus China existential. And, you know, the US itself calls it existential.

geostrategic rivalry and then just say yeah okay let's put all our money into an app that makes cats look like dogs i think i've used that analogy on this on this show before what an absolute waste of time you need to be seeing capital flow to areas as it does in China under their system, where you're going to get the maximum bang for the buck. And it's literally bangs for bucks that we're talking about.

in some cases here. Now, there will still be money made doing that. Absolutely. But you may have to rejig the system to make it work. For example, as I said, tariffs and subsidies together with price controls in some areas. and either deregulation or more regulation to ensure that you get an outcome that works quote unquote for everybody. And I think we'll get more and more of that. And the US allies will be copying and pasting that because they're not going to be able to have free markets.

in the same way they did. Whatever controls the US puts in place is like an umbrella or a shield against a kind of a China system or a China block. Everyone with the US will have to mirror it. And we already see that happening on trade. The US is gradually moving towards everyone who it trades with having a common external tariff against China.

or doing that via a trans shipment. So for example, country X, yeah, they can buy as much as they want from China. Not one carton or crate of that is going to go into the US from them. So if they want to swamp their own economy with it, good luck to them.

And that's basically an incentive to tell them, no, no, we want you to match our external tariff. The same thing will have to happen with these capital controls. But another way that will evolve is through the use of the currency, which brings us back to dollar stable coins, which I think can be a very, very...

efficient way to build this new safari park that we're talking about where you think you're free you know you can go and sit in that tree or that tree and you can chew your you know your fresh meat and raw as much as you like but you're not in the jungle anymore Michael, let's get your take, because we already heard from Brent on how he sees this. Why are stable coins so important, and do they have the potential to really reinvigorate the...

dollars hegemony over the global financial system so that we no longer feel that the dollar is at risk of losing its reserve currency status. Yes, full disclosure, Brent and I are friends and have a very, very similar view.

on this particular topic. I know that he's just published a really, really great piece of work on it, which I thoroughly recommend people looking at. I got my own far slimmer piece of work out a little bit earlier and was making, I think, one key point the same way, which is when people were talking about these dollar stable coins initially, that because markets crowd, and I am saying that with a sardonic smile on my face.

We're just talking about, is this a new asset like an NFT that I should be buying if I have a buy all the things policy? How much money would I make doing this? And I fully understand why individual investors would be thinking like that, but they are missing the point. These dollar stablecoins are, as Brent quite correctly says, entirely geopolitical. They are about creating a new financial architecture which will enable the US to re-industrialize.

and where instead of the offshore, currently fiat, euro-dollar, being the tail that wags the US dog wagging the tail again, no matter how large that tail has got, because that tail is enormous. It's like a kangaroo's tail now rather than a dog's tail.

But these dollar stable coins will allow the U.S. to wag it again. Michael, let's tie all of this conversation together, run it through your mental blender, and let's spit it out in terms of market opportunities. What does this mean for investors? And also, how do all of these things affect major macro trends? Like I think we're in the beginning of a secular inflation. How does this play into that?

Okay, there are several different ways that you can look at it. You can slice the cake in different ways. So one of them, broadest, is are you team China or team US? And if you're on X or on social media discussing this, there are really passionate views.

either way and very clearly if you've got a strong view one is going to win and one is going to lose go short one along the other you choose and that's on the fx that's on the assets that's on every single related element of that team and what it has to offer i think that's a very simplistic way to do it but i know some people who do do that in the interim while we are getting along that path bit by bit step by step

I agree with you that part of what we're seeing, for example, in this AI surge, which is absolutely related to it, it's who's going to win the race for AI. Don't ask me why, but that's where we are. That's clearly inflationary. You're seeing power costs surge. You're seeing resource demand absolutely surge. And that will absolutely feed through into inflation in some areas. And at the same time, ironically, the AI we already have is highly deflationary.

And it's deflationary on two fronts. First of all, if companies aren't going to hire anymore, and we're already seeing companies actually start firing and replacing people with AI, we have the potential prospect of massive corporate profits and no one working.

I mean, if you push that to its logical extreme, it's a ludicrous scenario, but that doesn't mean we couldn't get there. Everyone loses their job and one person in the corner owns everything. In fact, even the Financial Times in the UK recently ran an editorial. Sorry, an op-ed. It wasn't written by the FT, but they published in their paper, which shows how important they thought the argument was, that rather than universal basic income, we need universal basic capital.

where everyone will need some kind of share in AI to compensate for the fact they don't have a job. Now, that sounds very much like universal basic income to me, but it's interesting that was, as I said, being discussed. Equally, if AI doesn't make any money whatsoever, and it can't make any money,

And it's all just about the military. And once the military gets that golden egg laid, it takes it, runs away and says to all the companies who did it, thank you, you can all go bust now. That's pretty damn deflationary in terms of asset prices. You know, that's going to wipe a hell of a lot of people out.

If that were the case, and if basically the US has outsourced the Manhattan Project to a lot of people who are in a race to make a nuclear bomb, per se, and then they'll just take it away and say there's no money in them, you know. So that could be another deflationary aspect to it.

But above and beyond that, we have real disruption baked into the cake right the way down supply chains from upstream to downstream. I was mentioning that very early on at the beginning, but that's what I thought would happen. What we're already seeing in terms of, for example, the oil refineries in Europe that got blown up. What we're seeing with Russia and Ukraine doing to each other's energy infrastructure. And what logically China...

is already doing to the West in terms of these rare earths, which, by the way, is seeing the price soar in the West and remain low in China. That's the paradigm they want to see. Well, the US and or the West needs to see that reversed. Low commodity prices for what they have.

in the West, high in the Chinese bloc because whatever it takes to achieve that. And there are lots of ways to do it. And it's extreme. And this is an important thing to conclude with here. I think we may be looking at a world where we don't have one price. for commodity X, Y, or Z? We've already got a bifurcating technology environment. We've got bifurcating supply chains for certain goods. Why, for example, would we have one very close set of benchmarks for oil?

We don't have one for germanium right now. We don't have one for other rare earths. We have a western and an eastern. And I think we will have that for lots of different commodities. And you can make serious money playing that the right way and you can lose serious money.

not playing it the right way. Doesn't that arbitrage opportunity potentially create or extend a global network of crime that seeks to arbitrage those prices by... pirating things into countries that they're not supposed to be imported into?

Let me ask a slightly sarcastic question in a very British way. Your first time in markets? Yeah, absolutely. Of course it will. And there'll be money made doing that, but it will be highly illegal and you'll risk getting blown up quite, quite literally. I mean, during the Cold War, we certainly had some grey market activity.

and I'm sure we all have some here. But if individual investors at home are listening and thinking, yeah, I'm going to be a profiteer, the kind of guy who in London in World War II was selling nylons to ladies around the back of the pub, I wouldn't say that's your best. pension option right i think there are going to be far more crystal clear ones that you will be encouraged to do at home but yeah at the margin there will certainly be people doing that too because human beings are human beings

No, I'm not thinking about opportunities for individual investors. I'm thinking about a massive increase in gray market transactions that criminals like, oh, I don't know, mafia or Goldman Sachs or I'm sorry, what was I saying? others might get involved with in ways that are not obvious to the public. So I'm just suggesting that markets could become more complex and grayer than they are black and white now if the predictions that...

you're making come to fruition? Well, look, that's already been the case historically. If you do a deep dive, lift the stone, have a look at how some European economies have operated during the Cold War when there wasn't much. official trade flow between East and West and how certain countries which had organized crime networks operated within that and who they collaborated with and who they didn't and how.

I think you'll find it very entertaining reading, and it's certainly a lot better than the plot of the last couple of James Bond films. I'll tell you that for nothing. Michael, before we close, let's talk about where some of the opportunities that are on the upside for both our institutional and...

retail audience are. Where are opportunities in markets? How should we be thinking about all this dire news in terms of upsides? Look, there's a lot of upsides to it. So I warned, as I said, when Trump won re-election that we were going to enter the world that we're in now. And I spelled it out really pretty concretely. I even mentioned things like the Panama Canal.

At the same time, I didn't say sell everything and run away screaming from the US. And when people started to do that, I was mocking them and saying, you don't understand what's going to happen. It's part of the interests of this particular new paradigm to make sure that people do okay.

Maybe not the same trades you used to make before. Maybe you're being corralled in a certain direction, but there are still directions in which it will be worth going. And one clear example of that, of course, is AI. Where if you look at the market cap of NVIDIA now, it's more than the GDP of Germany. And you look at the market cap of Microsoft, and it's more than the GDP of France. So I'm not telling anyone what to do specifically, and certainly not in terms of those two stocks.

What I'm saying is if you understand how economic statecraft works, you understand how grand macro strategy works, you know, factoring in also the military and the political statecraft alongside that. You can start to see what will need to happen in certain areas and where money will be made and where money will be lost. And that is the one critical set of lenses that I've spent all year trying to share with people. Put them on.

and you'll see for yourself what you need to do. Don't put them on, and you're just guessing.

And you've done quite a lot of writing about these things. So for people who want to follow your work, before we close, tell us what you do at Rabobank and how to pronounce Rabobank and where we can follow your work. Sure. Well, for us, it's Rabobank. If you're Dutch, it's Rabobank. And I always get confused between the two. So I'm a global strategist, or you could pronounce it global strategist if you want to try and make it Swedish. And I do what we've just done on this discussion.

I'm cross asset, cross geography, cross disciplinary. And I'm trying to look at the biggest of big pictures in order to understand what's going on at the local level, tying together the micro, the macro and the meta. So that's what I do. And if you've enjoyed.

hearing this or this is your first time hearing me in particular uh obviously go to rabobank knowledge now you do have to be a rabobank client to get the best of that but some of the stuff is available there look me up on linkedin some of my recent research which is most appropriate to these discussions, is available there. And I'm also on X at the Michael Every, all one word, T-H-E-M-I-C-H-A-E-L-E-V-E-R-Y.

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 Michael back on the show. And listeners, you're going to find the download link for the post game trade of the week in your research roundup email.

If you don't have a Research Roundup email, that means you have not yet registered at Macrovoices.com. Just go to our homepage, Macrovoices.com, and click on the red button over Michael's picture saying, looking for the downloads.

Patrick, this week you're taking the other side of one of the hottest trades on the planet, South Korea's AI-fueled rally in technology stocks. You've got a relative value setup that pits the KOSPI against the NASDAQ. What's the thinking behind it? Eric, for this week's Trade of the Week, I wanted to highlight a developing divergence in global tech leadership, specifically between U.S. technology and South Korea.

The Korean KOSPI index has been running hot on the back of the AI memory super cycle. The EWY ETF, which tracks Korea, It's up more than 100% since the April Liberation Day lows, a massive move in just six months. Samsung and SK Hynix have driven nearly all of that upside. My skepticism... is that the rally is extremely narrow. Korea's market is almost entirely leveraged on the memory side of the semiconductor cycle which makes it inherently more volatile and cyclical.

If either of those two names stumble, there's no diversification cushion in that index. And on top of that, geopolitical risk remains an ongoing overhang. South Korean chip makers sit squarely in the middle. of the US-China technology fracture and any change in export policy or restrictions could hit them disproportionately hard. Now, when you compare that to the NASDAQ 100, yes,

There's concentration risk in the MAG-7, but it's still a much broader and more structurally diversified index compared to the COSPI. On page 2 of the Trade of the Week chartbook, you can see that since the post-Liberation Day trough, the KOSPI has nearly doubled the NASDAQ's performance up 100% versus roughly 50% in the NASDAQ 100. My view is that this gap has likely run its course.

Both markets have benefited from the AI boom, but Korea's move looks stretched. From here, there's a strong case that the NASDAQ can outperform the KOSPI if the rally continues. And if the markets turn lower, the downside likely to be more severe in South Korea. So to illustrate the trade, I wanted to express this divergence through a straightforward long-short relative value setup. long US tech via the NASDAQ 100 QQQ and short South Korea via the EWY ETF. The bigger question...

is how to size the trade. Do you equal the nominal dollars or does one volatility adjust since the implied volatility on EWI has doubled in the last two months? up from 22% to 44%, while the QQQ volatility remains around 20%. While there's a case for scaling by volatility, I'll lean toward the dollar neutral structure with the equal notional exposure on each side, given that there's a good chance the South Korean...

implied volatility normalizes back to historical levels over the interim period. Now, another way to add some convexity to the trade is to replace the outright short position in the EWI with a high delta. deepen the money put. For example, the December 115 put, which currently carries about a 90 cent delta, provides nearly full downside participation while introducing positive convexity.

if Kospi keeps ripping higher from here. This approach not only cushions some of the upside pain, but also makes the trade more accessible for investors who have restrictions or limitations around short selling. You still capture the directional move if the rally starts to unwind, but you're doing it with a defined risk and a bit of optionality premium working in your favor.

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 post-game chart deck. Eric, what are your thoughts into equities? Well, Patrick, as I've said before, I think we're in the early stages of a secular inflation. And the trap here is everybody mentally associates inflation with really bad for the stock market. It's only really bad for the stock market.

after a bunch of feedback loops kick in that haven't kicked in yet. It's really good for the stock market in the beginning, and that's what sets everybody off thinking that the inflation isn't really happening. That's what I think the setup is here, and I think we've got a while left before those feedback loops kick in. So I think this market can continue higher in the intermediate term, but boy, it is feeling kind of bubblicious up here. So I really don't have any strong direction.

But bigger picture, I think we probably go higher first and eventually face some serious headwinds as this inflation really kicks into gear. But right now we're in the early stages. Well, Eric, certainly there's a possibility that the bull trend continues on the S&P. It continues to make higher highs, higher lows, stay in primary bull trend. But underneath the surface, there are some concerns. First of all,

I want to highlight the breadth of the market continues to be awful. We're sitting around 40% of stocks above their 50-day moving average. It means 60% of stocks are downtrending right now. In addition to that, And we're seeing sectors like the financials not participating. They're getting very heavy and rolling over. So this market is increasingly reliant on the MAG7.

continuing to rally and while certainly we're seeing strength in google and amazon and names like this uh this really will rely the semiconductors continue to rip which brings that focal point of nvidia's earnings coming in a few weeks which could actually end up being a key pivot point so maybe we have markets that hold up here and maybe even make

new highs over the next couple weeks and likely nvidia's earnings is going to decide whether or not this rally still has legs for a year-end push now from a technical level what are the things to watch well the market here just pulled back straight into a 50 retracement of its prior advance finding support along its 50-day moving average this is still bullish pattern which is that if it's bought on dip here and pushes higher then everything is fine where i would

start to have concerns if this market started to crack below 6700 and the more important level is below 6600 because at some juncture there's this big air pocket of systematic traders that would end up having to de-leverage and or flip positioning which could put 100 plus billion dollars to hit the bid systematically to me

We're not at that moment where that vulnerability is there, but really the bulls need to keep this pattern of higher highs and higher lows going in order to keep that market away from that danger zone. All right, Eric, let's touch on that dollar.

Well, the Dixie is flirting with 100 this week, right on the edge of an upside breakout from the consolidation range, but it's not a breakout yet. So it's either topping here right at its resistance level, at its key resistance level,

Or perhaps we're about to break out to the upside. I think headlines are going to drive this. I have no idea what President Trump and Secretary Besant have in mind next, but I suspect it will be their actions that determines what happens to the Dixie next from here.

Well, for me, Eric, the dollar continues to actually be setting up for a potential bull continuation. And this could be a genuine disruptor on an intermarket basis because a lot of the... reflation trade assets that have been working so very well throughout the entire year were on the back of a weak US dollar.

And it's been a consensus bearish positioning on the dollar. So if we have a counter trend trade, it offers an opportunity to be quite disruptor to a lot of the bigger investment themes. So is there room for continuation? Well, look, we are. We see substantial breakdowns in the pound. The euros rolled over. The U.S. dollar yen keeps making higher highs. The U.S. dollar cad makes higher highs. We have structurally strength.

in the US dollar against a lot of these cross currencies. And so for me, as we see this double bottom and basing formation developing the dollar, it's going to be very interesting to see whether or not some sort of a short squeeze can ensue here that squeezes that U.S. dollar up to 103, 104 on the upside.

Eric, what are your thoughts here on crude oil? Well, Patrick, once again, we seem to be stabilizing right around $60 WTI. I still say anything's possible from here. Seasonality stays bearish until February or so. I wouldn't be surprised if there's another $10 or 15.

even of downside from here in crude oil prices before the next really big move happens to the upside. So I do think the big move that comes next is an upside move, but I don't think it's time yet, and I see plenty of room for lower prices. So, Eric, I want to address your point about the downside. Well, look. we continuously are seeing lower highs, lower lows, developing this primary downtrend of crude oil is still intact. And we do have a key support line that if we...

had any technical breakdown of that support, it could create some short term liquidity issues that could cause crude oil to have that short term kind of washout that you're implying. That's always a short term risk. One that I think can be easily hedged out. Overall, I think from an asymmetry perspective, I actually think the upside is much more compelling on crude oil, even in spite of that short-term volatility risk.

I think the asymmetry remains skewed to the upside. And in fact, I think that the best thing to do here is to potentially have light positioning in.

and having some of that downside hedged out and have some skin in the game to see whether or not the bulls can crack that 50-day moving average and spur a little bit of short squeeze on the upside we'll be watching uh what the next price move is there's some key levels around the 62 level on crude if the bulls can beat it it could create a feedback mechanism that could squeeze the crude oil up into the high 60s all right eric let's move on to gold here

Well, Patrick, I'm on the fence between Ola Hansen's view that the next leg higher in this gold bull market will be a 2026 story versus maybe a different view that a sooner higher move might be in the cards already. The reason I say that the slow stochastics and the RSI both went from extreme overbought to oversold. The stochastics haven't flashed a buy signal like this since late August, just before the meteoric thousand dollar.

rise from $3,400 to $4,400 began. Now, we just got that same signal on the stochastics. The RSI hit oversold, too. The RSI didn't even give us that oversold buy signal back in August. getting it now. So arguably, we're getting a stronger buy signal from the technical indicators than we did back in august just before that thousand dollar rise does that mean i think we're about to see the next measured move thousand dollars higher from here up you know to five thousand uh well

I see a few signs that that might happen if the dollar doesn't explode higher, but I still think that's possible. So how the dollar situation resolves itself from testing the high end of its consolidation range, I think is. definitely going to be relevant here, but potentially we could have a setup here for a sooner than expected upside resolution to the present consolidation pattern that we're experiencing in gold.

Eric, technically, you can definitely observe some short-term oversold conditions, which I have now seen a gold and silver do 50% retracements of their prior rises. The question here, is that is this a bigger correction or is this simply a consolidation from a very overbought market? From my perspective, Eric, I think gold can... put in its bottom this year but the question is can we see gold surpass its previous high

this calendar year. I think that we could see a little bit of a compromise between Oli's view and yours, which is that we do put in short-term lows. We could see gold strengthen off of those lows and maybe the break to new 50. two-week highs and or new highs happens in the new year one way or another i still am structurally bullish gold and silver this entire pullback is i'm viewing as a big

buy on dip and a correction for a continuation pattern into a new bull move still into 2026. Eric, let's talk uranium.

Well, it makes perfect sense that we're consolidating here after the news flow calmed down. The last big piece of news that we had was the news of the U.S. government buying into and subsidizing Westinghouse, building a bunch more of their AP1000. power plants. We haven't had super catafragilistic

positive bullish news in almost a whole week now, so it makes sense that we're consolidating on the back of a whole bunch of positive news flow. All indications are that the bull case is as strong as ever. The one big systemic risk that I see... could screw this all up for us or at least present a wrinkle in the long-term very bullish nuclear story would be if the ai trade started to be unwound because i think a lot of

the nuclear trade has benefited from AI sentiment tailwinds, if you will. If that tailwind turned into a headwind, if there was a reversal of the AI trade, that would be a big risk to our nuclear stocks, including the uranium miners. But that's the only big risk that I see right now. Otherwise, I think it's an incredibly bullish story. Eric, I want to focus specifically on the URA, which is the uranium ETF.

uh of all those stocks and obviously there was that positive news that came from cameco that caused it to break to higher highs what's interesting is the ura faded all of that strength back down to the lows where it was trading here in October. So for me, this is the first price action that is showing a little bit of heaviness. While this is not in any way broken its primary bull uptrend, this type of price action is at least

showing that uranium is starting to get tired after having a pretty epic six-month bull run. A question here is that, is it overdue now for a little bit of a longer or deeper? market correction or is it just going to bull continue from here i'm at this point very neutral i'm not loaded up on uranium here i'm going to see if we're going to get some buying opportunities on a little bit deeper dips

Patrick, before we wrap up this week's show, let's hit that 10-year Treasury note chart. What we've seen. is that a short-term bottom developed around 390, very short-term trip below 4%. And since the FOMC, we've seen some reversion, which is the yield is now picked up to about 410. We now are in a situation, well, is this primary downtrend of yields going to persist? Well, I think that what's happened with the lack of economic data being released because of the shutdown.

and the Fed basically cooling everyone's ambitions of a dovish Fed off during the meeting, we could end up seeing a bit of a trade range here until there becomes more clarity. I wouldn't be surprised if we chop around. here through much of November and that the bigger move develops into the December FOMC meeting. 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. on this week's research roundup you're going to find the transcript for today's interview as well as the trade of the week chart book we just discussed here in the post game including a number of links to articles that we found interesting you're going to find this link and so much more

in this week's research roundup. That does it for this week's episode. We appreciate all the feedback and support we get from our listeners. And we're always looking for suggestions on how we can make the program even better. For those of our listeners that write or blog about the markets and would like to share that content with our listeners, send us an email at researchroundup at macrovoices.com and we will 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 spelled with a K. 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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