50% Crash, 0% Inflation Next; ‘Endgame’ Has Begun Warns Analyst — Mike McGlone

[00:00:00] Mike McGlone: the only game left in town is u.s stock market by the end of year everything will be down including inflation down crude oil down everything will be down following bitcoin following precious metals bond yields lower the key question is what's going to be the end game to me the end game is this pump then dump uh pattern lead the leader number one cryptos the bitcoin i just enjoy all the people keep trying to buy the dip i'm like what are you missing about this asset class that's it is now the complete dud in the space you sell the duds look to sell duds now that is almost a guaranteed recession people just pull back everybody knows we're overdue for it so mike mcglone senior commodity [00:00:37] Speaker 2: strategist at bloomberg intelligence is back welcome back mike good to see you a lot to discuss today [00:00:43] Mike McGlone: oh yeah david well thanks for having me back you're one of my favorite persons to talk to and i do provide appreciate a lot of your interviews they really are very educational uh thank you very much [00:00:52] Speaker 2: high praise coming from you mike and uh you're one of the guests that make our program um successful so um let's start by talking about why precious metals have been down all year and focus on the macro behind the picture here it's not just gold it's palladium it's platinum and i'll pull up a chart here just to leave on the screen for the audience to um to look at while we discuss this uh gold uh is at four thousand dollars right now considerably uh down considerably from five uh five thousand just a couple months ago and 5 500 from its highs and it's not just gold the gold price it's a sentiment of gold if you take a look at the comex open interest for example that's actually at a negative position right now as we speak and um if you take a look at other indicators like uh the bullish index for uh gold miners that's um at multi-year lows as well what happened yeah well there you go um pump then [00:01:51] Mike McGlone: dump is the theme so far this year the significance for my outlook is i think it's just getting started so every single precious metal gold silver platinum platinum pumped most of them pumped on the back of gold pressure uh silver caught up silver was up 60 and it dumped it's classic peak stuff some of us have been bullish precious metals most notably gold for decades looked at that as sometimes the bell rings and gives you a chance to sell and for now we've had a decent backup so let's look forward 4 000 goals decent support i think ultimately the bottom doesn't really come into 3500 i think it's stuck in a range for years if history is a guide the key theme is these are non-income producing assets stores of value speculative obviously they get way too excessively speculative and then there's just a much better game in town for first of all i look at what's your alternative to things like gold well that u.s long amount at five percent i think is way too much opportunity cost and there's only one game left in town it's just the unprecedented earnings in the stock market in that rap that that rapidly advancing bull market so to me that's sucking everything most notably from the metals from commodities from um from cryptos and the key question is what's going to be the end game to me the end game is this pump then dump uh pattern which you know started in bitcoin natural gas and silver and corn is going to trickle down to everything including crude oil and the stock market and the stock market might lead everything [00:03:23] Speaker 2: who's been doing this pumping and dumping i mean we don't know for sure well there's nothing like um [00:03:28] Mike McGlone: speculators speculators jumping on board i just love that when you get that positive gamma kicking in you ride it and then those of us or long term um try to strategist investors you say thank you and you sell into the selling when they're yelling so mostly good speculation you mentioned some of the speculation declining in gold i haven't looked at that so much but i look at gold at 4 000 now it's finally at a decent level macro big picture i think it's stuck in a trading range like crude oil has been for the last 20 years that's just usually how it works but the key theme for everything is right now as we speak 180 day volatility and silver is the highest since 1980 that's almost 50 years versus s&p 500 180 day volatility on gold is the highest versus the s&p 500 in almost 20 years 2007 180 day volatility in the bloomberg all metals index is two to three times that's me 500 see the problem there it's that's the cell signal that tells you speculation is kicked in in the metals now we're just reverting but it's also showing you that how low volatility is in the stock market that's my key theme this year so far i've been wrong i think it's going to play out that volatility that we're seeing that massive volatility in gold and metals and crude oil will pick up to the stock market always has and we're going to see a normal backward back down in the stock market this year basically a down year in beta we're way overdue for it it's in a midterm election year the last the only two down years s&p 500 since 2009 have been 2018 2022 midterm election years and the cryptocurrency market is guiding us that way so to me this is going to be that kind of years great for traders and probably not so good for buying hold investors and metals are good indication that they're all down so i i'll i'll just give you a little indication to me copper is next on that list to potentially um it's pumped to potentially follow the dump and the key theme for copper that's just to stay elevated stock market has to go up and it might be indicating that it's just going to go down in the year [00:05:28] Speaker 2: but copper okay i'll come back to this chart in just a bit i've left that there for a reason but copper has been diverging from uh from gold so if you take a look at copper right now and uh that's not actually a good uh good ticker if you take a look at um copper and how gold have performed relative to each other uh they have uh followed each other quite closely like the correlation long term is like very close to one uh first of all uh but especially in the last year or so mike they've been trending together ups and downs and ever since march uh may rather ever since may they've been diverging why is [00:06:09] Mike McGlone: that well first of all gold got their expense but copper to me i view it as almost completely dependent on that rising stock market so i like to use the per pound price of copper you just take that per pound price divide by the s&p 500 s&p 500 just take three zeros off it's been the same trade really for 10 years and s&p 500 starts taking off in 2023 yeah and copper is just lagging behind why is it lagging behind well okay so we ai is kicking into the s&p 500 we get that it's all technically get that which should be demand for copper but if you overlay copper with what's happening in iron ore or what happened in crude oil they're lagging and in bond yields in china those are my key indications so my copper team based in london grant spoy leaves it says copper is pretty well balanced parity still somewhat of a deficit but your bottom line is its performance has just absolutely been poor versus the stock market and i i have to point out if you're an actual investor in underlying copper or rolling futures actually holding the metal you are trading at two to three times the volatility of the s&p 500 and your performance is basically lag completely for years that's just a poor performing acid i get it electrification decarbonization everything this little pump and energy got it but it's telling you this is a waning asset this is a weakening metal and all the other metals are starting to trickle down iron ore is even down on the year now in china it was up it's telling you to me if you're long copper you need that stock market to go down or go up and the stock market drops which i think it will not copper is going to probably drop it two to three times of volatility based on what is normally works how it normally works out if you're watching markets move in real [00:07:44] Speaker 2: time and thinking about how to act on these movements well today's sponsor plus 500 is built exactly for you it's a futures trading platform regulated by the cftc and nfa in the u.s enlisted on the london stock exchange you can trade across crypto forex indices energy metals and agriculture all from one interface what stands out is speed and control you get live price feeds built-in technical indicators and proper risk tools like stop loss and take profit so you're not flying blind when positions move fast and if you're not ready to put money on the line yet there's a free demo account where you can test strategies in real market conditions without any risk scan the qr code on the screen here or use the link in the description down below and you can get thirty dollars off when depositing three hundred dollars terms and conditions apply you said earlier one of your comments stock market leads so what is the stock market telling you right now oh well it's it's it looks to me like [00:08:42] Mike McGlone: we're way overdue for just some normalization like i mentioned earlier the key indications i like to point out is i get a sense that that day to june 5th and the stock market will go down in history that was kind of a peak where it dropped two to three percent on on the uh stronger than expected unemployment number will go down in history similar to october 10th last year in cryptos that put in the peak they've been in a bear market since continue to go down great leading indicator there the last to usually go down is u.s stock market i think it's just a matter of time so i think what we have so far this year is initially the beginning year had a bit of a red candle on the air and then it went up to green i think by the end the year it's going to just be a big red candle in the stock market following what's guiding us in cryptos following the lessons of volatility and massive speculation with all this you know all these uh ipos and things and if i'm wrong on that then the key model that should stay stable is copper but the key thing right now is just really you know with it's only getting left in town and i look at every all my other analysis i look at copper yeah it'll be fine if the stocks go up i look at metals oh they'll be fine if the stock market goes i could even commodities they'll be fine if stocks go up we've just reached that end game and here's a key theme is also now we have the latest inflation number 4.2 now it's probably a peak that's cpi because of energy but we've reached that end game well when you get to 2.5 times ddb maybe 2.4 it's come down a little bit that's u.s stock market capitalization that is the 10 on the one it's the 10 scale for increasing inflation when it goes up and deflation when it goes down it is into 10 on a hundred year basis and based on history and other examples japan in 1989 1990 when it peaked us in 1929 it is a 10 but it's what we've reached now is mr trump keeps trying to pump up the stock market he should be realizing and looking over so i'm like yeah if you do that you're it's the number one issue in elections is affordability and inflation you keep doing that you keep inflation you are not going to get the the republicans get hammered in the midterms and the next president if this keeps up is much more likely to be a democrat see the lose lose here we've reached the end game and if stock market goes down it's the number one reason they've created a recession because it's 2.5 times gdp so that's all my signals that's part of the reason i think gold figured out last year it warned us cryptocurrencies peaked warned us all this volatility we're seeing in crude oil and gold is just a warning to just get out it's extraordinary [00:11:06] Speaker 2: because it seems like tech stocks are the same haven right now with volatility happening all around the world the middle east experiencing a war and you're talking about a potential recession gold is not the place to be right now it's tracking something else and that's not volatility [00:11:21] Mike McGlone: well it's tracking what it did last year it warned us i mean i was lucky enough to be on top of that trade i made the tilt late to 2024s get out of cryptos focus on gold and i just never expected to be the best year since 1979 but now it has it's telling it's warned us something it front ran the war now we have this war but the key theme is the bottom line the 10 for everything on a global scale for all risk mass assets for all assets is the stock market in the u.s has to keep going up we've just never had that kind of a burden which means the risks are that goes down so to me that's where it is gold warned us and that's also the bottom line with almost all of the risk assets everything's basically a dud now most notably cryptos are duds metals are duds compared to the increasing stud as the stock market and that stud when it rolls over which i think will be this year i don't know when um tells you that's just finally we're we're near that end game we're way overdue for some post inflation deflation which afflicted japan for 30 years and has basically been affecting china for [00:12:20] Speaker 2: most of the last five to six years so you're still sticking to your deflation thesis oh sure well [00:12:26] Mike McGlone: i am i let's see if i get stopped out on that let's see what's happened look at precious metals reversed cryptos reversed volatility in stock market still way low the bottom line for all deflation is just the reverse in the stock market tilting back down in the air then you're that's your severe deflation kicking in and the later the year it happens david the worse it's going to be and i'm just sensing um that this is you know a selling when you're yelling market that i sensed in cryptos earlier last year and then in metals this year it's just trickling over the stocks let's talk about inflation [00:12:56] Speaker 2: for just a minute yeah 4.4.2 inflation most of that came from energy to nobody's surprise uh if you take a look at core however that's actually not moved very much from the previous uh reading and several items within the core index came down notably um medical services uh used trucks uh used cars uh the things that did go up for example energy gasoline um if you strip that out which is what the fed looks at uh that actually isn't that significant maybe your thesis is still playing out of course nobody predicted nobody you know no nobody nobody um saw the iraq war coming last year so uh if you had made a deflation thesis last year probably got sidetracked by this war but um ultimately the the core thesis is [00:13:47] Mike McGlone: still probably intact and and yeah go ahead i think so but it never can and can't be easy i'm making basically a call of a lifetime this is normal reversion kicking in but what's key thing what's driving inflation right now most people claim it's energy yes we've seen the pump up in gasoline from below from 280 to like 4 or 13 at the moment it got to near five it's coming back but the bottom line is if you look at the bloomberg energy spot index which includes gasoline and heating oil and diesel and brent and wti the heist the price it peaked at this year david was first traded in 2005. see that's a 20-year range we're near the upper end of the range it's going to go back down just the way it works so it's helping accelerate inflation but the bottom line for all inflation is the u.s stock market now energy in the short term that'll go back down but the problem is we've reached that high price cure so that the key thing i like to point out about energy even crude oil right now on the screen front crude oil is 90 that's wti i was first traded in 2007. not a big deal uh but in terms of inflation what i'm hearing from my colleague ana wong is we're seeing a lot of curtailing of other discretionary spending because people are having to spend on energy and food and things but this is not just crude oil and energy i see pretty severe potential deflationary forces normal cycles kicking in in corn and soybeans and wheat and most notably natural gas u.s natural gas the number one measure of heat electricity and fertilizer it was up a hundred percent that front future beginning here now it's down sixteen percent it's hovering around three typically goes down to two yes it goes up for summer for winter demand season but that's the number one measure measure of heat electricity and fertilizers country and it's starting to tilt lower so i see dominoes for deflation accelerating and the biggest one of them all is the stock market so that 4.2 percent will probably be a peak david i remember well it was almost it was july of 2008 inflation's cpi peaked at 5.6 percent with crude oil around 147. now here at 4.2 percent we're worried about crude oil which peaked about 120 this year the key thing i like to point out is since that bottom in crude oil and sorry in cpi in 2009 at minus two percent we've bottomed around that level or zero three times i think we're going to do it again by this time next year i fully expect cpi to near to be near zero and maybe even negative if the stock market goes down because it'll prove to me that's the number one theme for all inflation and it's the only way i think you're going to get the fed east is the stock market to go down see that end game and mr warsch is probably hopefully smart enough to figure that out because his legacy will depend on it right now the bond market is predicting [00:16:27] Speaker 2: actually hikes not cuts and and the long end of the curve has been following that projection upwards the 10 year is now 4.4.52 percent and um this uh this presents a challenge by the way to other asset classes if the long another long end of the curve continues to go up hsbc has already called this the danger zone so how are bond yields going to react in the intermediate term before this deflation kicks [00:16:55] Mike McGlone: in well i like the recent pivot for mr trump to wars to do what you have to do now he pushed back later the fed should ease the bottom line is mr bess is probably leaning over to mr trump saying oh by the way donald you need lower yields you need lower inflation you need to let the fed do what they need to do and maybe hiking rates in the short term will get you those lower yields because that's what's happened the first time they since they started cutting rates in september of 2024 bond yields i'm looking at the long when i use that because it's at five percent it's at that key level are up 100 basis points the stock market's up like 35 energy prices up about 35 but the 10 on a one to 10 scale on a historical basis for all inflation is the stock market now and mr trump once he figures it out might be able to say hey you know if it backs up a little bit i'll get those lower yields maybe i'll help my republicans in midterms and maybe if i don't keep inflation bid up um maybe the next president will not be a democrat because the way we're right now the way trends are going the next president will be a democrat so i think he's going to care i think all republicans are going to care but the bottom line is what happened is we've had the fed cutting rates with the inflation targets well above inflation well above their targets and the stock market on the tier history is going to look back and then say yeah that was dumb you're not supposed to be adding fuel to the fire of inflation and they have been now mr warsh has an epic opportunity to go down in history more like aaron or like alexander hamilton versus aaron burr or paul volcker versus um um who was the other um arthur burns because this is his opportunity his term will move beyond mr trump's and the proper thing for the fed to do is it's kind of hard to cut rates but you're probably supposed to be hiking rates in this environment now ecb just did today the rest of the world's hiking rates that's a major pressure factor on gold the bottom line is we are going to get post-inflation deflation at some point the problem is going to be from a much higher plateau because the fed started cutting too much too early and help fuel that [00:18:54] Speaker 2: inflation this is what trump said a press conference at the oval office the numbers were great you know what i really love i love the inflation you know why because as soon as this war is over when the war is over it's coming down it's going to come down like a rock that's kind of your thesis as well but he loves the inflation mike yeah well your average that's a key thing that's happening 55 [00:19:14] Mike McGlone: of the people in this country are wage earners that's kind of the bulk of the bell curve that voted for him not not the rich people although so the top 20 percent who are benefiting from the stock market going up they're now you know separating that k-shaped economy um and that's what's happened you see in the polls he's just getting hammered in the polls every day the stock market goes up inflation goes up obviously the war is related but he also got himself into big quagmire the war that he won everybody else is losing because we're paying more at the pump and more for energy prices and consumer seminars getting hammered what's it going to take first of all to get for midterms this is the first trade i'm looking at to get to the midterms for him to help alleviate that now i think i fully expect he he will i fully expect that december crude oil contract which is the top and open interest will be front month um around midterms is around 80 a barrel right now to be closer to 50. he needs that to happen he can make that happen now what happens in the gulf is a different story how he figures that out we'll see how but he will also we're seeing the classic example of of the invisible hand an invention when there's necessity oil is coming out of the gulf through pipelines and through other measures and it's really excel accelerating the surplus of supply from the u.s and canada and one key theme i really enjoyed is i've seen on the bloomberg energy chats as people are shocked about what happened in china and what's happening in china china has been steady the number one importer crude oil forever importing between 11 12 million bills between four or five years but what they did last year is their demands actually declining they'd use almost those all those imports to really pump up their strategic petroleum reserve some estimates are near 1.8 billion barrels that's five times the u.s and now what they're doing the chinese are always do they're the best commodity traders on the planet they bought you know allocated the crude oils around 60 dollars a barrel and got to near 100 started selling just their great governor uh for and great indication what to happen in what what happens in commodities and commodities and they buy low and sell high but the bottom line is what's really shifted so u.s doesn't need an spr anymore it was created in 1974 by president ford to cover 90 days in net imports with canada we are approaching 9 million barrels a day of supply surplus with if you include cruel liquid fuel biofuels and and mostly liquid fuels it's just the world's changed one thing that has [00:21:30] Speaker 2: changed for me uh that has stood out is that i'm no longer talking about the markets as a whole i'm not saying everything's gone up where everything's gone down which was the case in 2022 what do we do what do we hide or in the case of 2024 2025 it was throw your money on the dartboard and you'll make money this is no longer the case and that's the biggest shift for me this year um as somebody covering the markets you're no longer in an environment where gold's at all-time highs bitcoins at all-time highs stock markets at all-time highs and it's really a picking the assets game in this kind of environment what is the criteria that investors need to have on his or her dashboard in order to pick the winners [00:22:12] Mike McGlone: so the winners right now the only game left in town is u.s stock market and my predictions by the end of the year everything will be down following bitcoin following precious metals bond yields lower and the bottom line is once that stock market if it just gives away more of its games goes up us stock market was up about 12 percent in the year now it's only seven percent i mean it's waning i think by the end of the year everything will be down including inflation down crude oil down potentially on the year and the bottom line is we got it for that to be wrong stocks have to go up but everything's starting to trickle that way that's why it's trickle that way that's why i point out was heed the leader number one cryptos and bitcoin i just enjoy all the people keep trying to buy the dip i'm like what are you missing about this asset class that's it is now the complete dud in the space you sell the duds look to sell duds in a market that's shifted to the dud and you buy the studs they're buying the stock market but when the stock money the only final dud left look at precious metals they've turned into a dud cryptos have turned into a dud um corn has turned into a dud potentially agriculture all you need is a normal winter and you're going to see pressure on that a normal summer i mean normal grooming season and to me that bottom line is and they're all buying the the studs now once the stud turns which is the final game left in town that's your post inflation deflation and best i think the final my focus remains u.s treasuries might grab alpha this year haven't been right yet but that five percent long mine i think is going to just we're going to look back and say that was your last chance [00:23:38] Speaker 2: okay treasuries uh are your are your pick the bitcoin price i have on my screen what do you mean it's not a buying opportunity it's down 50 percent mike exactly exactly i love hearing that the bottom [00:23:51] Mike McGlone: line is yes it should be bouncing initially bounced from 60 back went back to 83 the 200-day moving average the bottom line is it is now the stud in the space there was one in 2009 and now there's millions it's a space with unlimited supply when people say bitcoin only has 21 million his limited supply say well what's bitcoin cash what's bitcoin gold what's bitcoin satoshi vision this is a place a space that's in the middle of a purge and then there's so many of them that are just way overdue to purge dogecoin is a joke it's still worth 13 billion dollars you have to wipe that out to take that to zero mr sailor was a great indication to buy around 2010 when he doubled down after a 10x that was another indication to sell i think we're going to get micro strategy and things like those stopped out and and then you'll put it in during bottom so i think the next key supports around 50 000 i doubt it stays above 80 i think it's going to 10 that's bitcoin bottom line for bitcoin to stay stable just to not go down there's a stock market has to go up and we saw those few indications a couple weeks ago in may when bitcoin started going down the stocks are still going up that was your sell signal it's ticking and it's going to hit supports it's going to bounce it's the way markets always work but focus on the macro this space is the dud it was the stud it shifted to dud that should last for a while and one thing i like to end with the most enduring pattern and trend in all cryptos is tether flipping in everything now this last weekend i think it was saturday yeah june 6th tether flipped in ethereum for a little bit to become number two now it's back as we speak on june 11th it's number three it's a matter of time it flip ins ethereum and to me it's a matter i think it'll be this year i think it's a matter of time that trend continues and it flip ins bitcoin they become the number one crypto and i point that out because that's the significance of this space we're finding out it's a great way for the whole world to get access to the us dollar via their phones you don't need to speculate in all these other cryptos to get out of their system and the dollars becoming dominant tokenization becoming dominant is when you get real assets on a chain on blockchain next to other assets to track nothing what are you going to buy and what are you going to sell you try yourself you're going to you're going to you're going to just be looking to short the stuff that's speculative like dogecoin attracts nothing you're going to be looking to buy or at least arb the stuff that tracks something has an underline underline something that tracks for instance right now the key things are u.s treasuries and [00:26:12] Speaker 2: and stable coins well how did sentiment in this sector get so bad was it was capital sucked out into the and placed into the ai sector we had charles hoskinson by the way just last week admitting on a video that cardano the project he started is dead remarkable words there's a big feud over twitter over this but you know when you have a founder of a major project making these kinds of remarks it's it's echoing the overall sentiment of the entire sector which is that crypto is dead and anthony pompliano i interviewed him in miami when i was um at the miami consensus conference uh one of the most outspoken proponents of the crypto sector for years and years and years and he said most of crypto was dead so it's good to hear that oh go ahead sorry that was it i i i i just i my question is how did this happen i i've heard some of your interviews i appreciate [00:27:07] Mike McGlone: that i di deliberately ignored avoided the consensus conference i go to a lot of conferences because i knew what's going to say they're all going to be talking about bullish things and the space is dead i will go back when i think it's time to get back in because what happens in conferences anything a lot of times you get a lot of people who say things that everybody else wants to hear i've so heard that at com i was at a conference um late last year and there was a wealth conference in naples um florida and i deliberately told everybody bitcoin's going down i got booed i really appreciate the boo because that's what they did not want to hear and that's why it's important to say that but the bottom line is price drives everything price has peaked and i like to put in the macro that we had the best backtest in history we had a good reason this was a new unique type of money massive speculation etfs etfs were launched and it took it away from the insiders that people got in early i've gotten part of that to the mainstream and then he had mr trump jump on board and people like his son and sons you know toting up coins some might people might make that illegal in the future that's a classic peak now in the purge the questions where's the bottom i like to say okay if you expect any type of stabilization number one stock market has to go up that's already starting to tell you so to me this purge can attain you're supposed to send abby rally in these duds until we purge all these excesses and the bottom line is a commodity person i like i like to use the the analogy i was using last night is cryptos are basically a bunch of pigeons versus doves and precious metals just the doves flew too high there's just so many pigeons we got to purge them like you mentioned cardano there's just so many of them we purge those get those back to reasonable prices and then we might have a decent rally to bounce and this key thing i love the quote from jim brant jim grant is bubbles precede use cases and the use case right now is tokenization the dollars winning you don't need xrp when you can [00:28:54] Speaker 2: just use a dollar on a token so you said that the world is changing and wanted to hear the world is changing or the world has changed where your words the world has changed i wonder if this change that you're referencing is permanent and the follow-up question to that is what does the end game that you're referencing look like in relation to the world changing uh well the i'll start with the [00:29:16] Mike McGlone: end game to me it starts with what you saw in cryptos that purge is crippling and will trickle down to it's trickling down to metals and commodities and the stock market and we'll have a down year this year is my prediction this year and then we'll move from there but to me this is part of a post inflation deflation that books like the price of time by edward chancellor say always happens it's always a matter of matter of time and we should have a purge reciprocal to the surge hasn't started in the stock market yet that's wonderful but there's been great indications and great opportunities five percent on the long bond you can lock in that for you know who knows how long and then of course if yields drop you make a lot of money and very low return you know very low risk but to me this is just getting started to be wrong the stocks have to go up to be right just starts it starts you know in the baseball they always start to say it starts with the walk it starts with the stock market turning right in the air my point is if it starts turning red as we move on to the second half it's not going to stop um as much as mr trump tries it but here's the significance of it why it's so important dave is we've reached that point i love writing about it a year ago when mr trump got elected well he's got the timing of herbert hoover who was elected in 1928 i'm sorry but we're just that expensive in terms of all risk assets and he keeps trying to pump them higher which makes inflation go higher which makes his voters get upset it's it's the lose lose end game maybe we'll get lucky maybe when people call you know last year they called me i enjoyed that nickname i learned in cryptos when i was bearish i was nickname was mick retard i own that nickname i love it and maybe by the end in this year that's me oh come on it's it's oh come on social media it's part of the i love the banter it's just some of us i just i you're never right when people call you mcgenius in fact if you think people say you're right about something that's usually when it's time to get stopped out but i love that and if i'm still mc retard in the stock market by the end of this year then yeah the whole base case changes a little bit but right now there's only one stud left in in the whole world right now it's u.s stock market and all the other studs most of them have been going by the wayside and i you know when that goes when that goes we're just going to get a normal reversion in cpi towards zero always has happened it's happened three times normal reversion of crude oil back down in your back towards 40. i mean that's what it's done three times in the last 20 years after spike spiking up high um some other markets copper um copper probably easily towards four dollars a pound if this normal happens this is the normal reversion silver below 50 normal reversion i mean it's just still well buffer was a year or two ago but all that stuff for that stuff not to happen that s p 500 up seven seven percent in the year better be up 15 by then yeah if it's up below less seven or kicking down it's just the normal version kicks in as indicated by bitcoin [00:32:04] Speaker 2: yeah and by the way i think uh the the s p might soon include spacex and uh we'll see how that performs and we'll see how that moves the market because at that kind of valuation it'll certainly move the entire market uh one way with the other now finally mike speaking of comments i don't think my audience has been mean to you but i have seen oh the perma bear is back i mean you're not a perma anything you're just you you're just you're just looking at what the data is telling you um but when you see comments like that and you know how do you react do you look at that as a sentiment gauge so in the stock market [00:32:42] Mike McGlone: it is completely accurate you gotta own your mistakes i've been wrong in the stock market for way too long but i found major alternatives first of all in cryptos bitcoin most notably in 2019 when it was around three to five thousand i mean that was a classic buy signal i enjoyed putting out and then pointed out when it was at ten thousand twenty twenty it was going to add a zero and then gold and i've always been bullish gold is a great alpha source versus the stock market that's worked since 1997 it's provided lower lower volatility better returns since the stock market now it fell off that horse recently so but now admittedly uh i view since those trades i think are over there's only one game left and that's treasury market when the stock market goes down when means i think it's going to be this year but that's an accurate comment i own it they're right but i like to point out i found the alternatives now as a commodity strategy as i said point out is if you're bullish all commodities at this stage now any broad commodities you basically have to expect the stock market to go up because the number one thing to remember commodities is elasticity prices go down because they went up because the ability of humans to create more with less and when metals roll over like they're they're the least elastic commodity [00:33:47] Speaker 2: you got to be worried and i'm worried okay uh final question what kind of a correction are we talking about 20 15 i mean nobody knows for sure but the scale would match your thesis uh in recessions typically it's 50 for the s p 500 for a bear market is defined by 20 uh from its peak uh are we are we [00:34:08] Mike McGlone: going to be in bear market territory at least there's only two examples of history in terms of stock market cap to gdp and that's 1929 us that peak in 1989 in japan now i was part of that one in 1989 japan i started in the business in 1988 covering japanese clients from the us so the bottom line is let's look at the facts if we drop just back up 20 that's 50 of gdp that's basically a recession the bottom line is you drop 20 and stay down now that is almost a guaranteed recession people just pull back everybody knows we're overdue for it so i don't know how far or how long it's going to be as people said i've been wrong forever rightly so found much better ways to get better performance than the stock market in better returns now i think i look at it as i'll point out facts we've had two 50 drawdowns in the s p 500 since the start of the millennium 2000 i think we're going to set up for another 50 drawdown that's a bridge way down the down the river starts with it starts with one thing right now if you end this year in the red in the stock market i think that's the beginning been wrong admitted but while my indications are pointing that way what would change your mind let's [00:35:15] Speaker 2: say the s p continues to grind higher at a certain point you would say to yourself you know what time to time to switch to the more neutral or at least bullish side uh what uh what would make you do [00:35:25] Mike McGlone: that in theory i don't know i don't know what it's going to take right now but i do point out the alternatives are still shocking what we saw happen in gold last year you know worn this is something wrong what we're saying happening in cryptos worn this is something wrong i would love to see some divergent straight in cryptos haven't seen anything but that i'd like to see some of the commodities show anything but just lagging performance versus the stock market most notably copper copper and industrial metals have just been i mean they're only going up because the stock market goes up and when stock market goes down they go down a lot more like to see some signs of divergence and i don't see that as far as i don't know what it's going to call but it's you know hypothetical for now um the the call for this year so far has been so i'll put out some i put out some prudent shorts so far beginning year beginning it was bitcoin near 100 i moved that down to 75 people remind me remind me went through that well right now it's at 62 so it's below that level silver around 100 silver i think is only going to go up and the stock market goes up and it's doing the opposite around 100 now that's per drop down um i moved that down to 85 copper i put out a prudent short around six or above that so i still haven't do some well on that horn above five looked like a prudent short because everything's so dependent um and now even crude oil above 100 it to me is a big problem so i don't know what's going to take but some of these prudent shorts so a lot of these things are completely dependent on the stock market going up are tilting lower and even despite the stock market going still high you see that [00:36:47] Speaker 2: it's it's it's it's to me it's an end game well the fact that oil as has been at above 100 and it's still hovering about 90 a recession is still not here yet at least not in the u.s and canada that's a different story but a recession still hasn't hit the u.s yet what does that tell you does that mean the recession isn't coming i mean if it's going to come it should it should have already happened [00:37:08] Mike McGlone: right then oh well we've seen that before i mean i've learned my lesson about coin for recessions and a lot of economists have the bottom line the number one the 10 on a one in ten scale for a recession in this country now is the u.s stock market going down again it's 2.5 times it's to me that's the all that matters and so if you're at the fed right now the best way which makes [00:37:26] Speaker 2: sense now now now that makes sense how the administration the fed are both concerned about propping the stock market up together with more liquidity well look at it here's look at the [00:37:34] Mike McGlone: iterations if inflation stays high like it is which it probably will the stock market being elevated you're going to get hammered in the midterms it's the number one election the next president's likely to be a democrat it's just the way it works you're missing the main theme here if stock market goes down it's a recession what does that mean it's lose-lose you're going to get hammered in the midterms the next president's going to be a democrat that's the stage run they should be panicking um it should be pressuring the fed to ease but by pressuring the fed to ease with stock market cap the gdp at two now we're at three at 2.5 it's just going to make the plunge worse cryptos have figured it out gold is figured out and that's my point is this is a great opportunity to just be a trader a great year to be a trader pick your spots and the key thing i think that's worthy of buying so far this year is that long bond around five percent because you get that yield and maybe now we're finally getting a little dip in their gold and of four thousand that might be initial a dip to buy i haven't really put anything bullish on it yet but i'll take a look yeah excellent thank you very much [00:38:31] Speaker 2: uh mike excellent show today where can we follow you on your show david i appreciate that i enjoyed [00:38:36] Mike McGlone: watching a lot of your other interviews i'm on the bloomberg terminal um on x at mike mcglone 11 and linkedin mike mcglone senior commodity strategies bloomberg intelligence appreciate your time and [00:38:48] Speaker 2: uh we'll see you again soon do follow mike in the description down below follow his x account great account and uh we'll see you soon mike take care for now thank you cheers thank you for watching don't forget to like subscribe