00:00Well, that's what it looks like right now, Scarlett.
00:02I think Iran's very good at their marketing.
00:04But if you look at the facts from the Gulf, my colleague Javier Blas just posted that.
00:08We're getting close to 80 percent now of exports of crude oil from the Gulf with the U.S. protection
00:15in there and through different pipelines, which Saudi Arabia just repaired.
00:19I think what we're getting is that classic example of necessity invention kicking in.
00:23And crude oil prices up 65 percent in the year.
00:25And then exporting about 80 percent of that, that's win-win, making a lot of money in refined
00:30products.
00:31There's just so much profits in this space.
00:32To me, the whole space looks like a classic selling when they're yelling, a lot of peak
00:36inklings in it.
00:37And what it's doing, it's breaking stuff.
00:39Look, it's broken the stock market.
00:40We got almost central banks to start tightening.
00:42It's getting towards a volatile time of year.
00:45And I look at it as one indication that this is not going to last long is that U.S.
00:49natural
00:49gas price.
00:50It pumped a little bit last week and now it's back down again.
00:52It's down in the year.
00:55So what do you think the timing here?
00:57I'm actually a little surprised that gold isn't down on the news, that more oil seems
01:03to be getting through the straight, number one.
01:04Number two, this pipeline seems to be reopened.
01:06I'm surprised we're not trading maybe materially lower here today.
01:10Well, I'm glad that's also crude oil is having that pump.
01:13It's a little bit of a continuation from last month.
01:16Also, we're toward the end of the quarter.
01:19But one thing you might have said inadvertently, Paul, it makes a lot of sense, is gold's collapsing.
01:25Gold's down 3%.
01:25And the key theme is the whole markets should not be fighting the Fed.
01:29And I mean, just the fact that the Fed might be hiking rates a week before the election
01:33at 70% chance, that's a major sign for everybody.
01:35Like, OK, we're getting a lot of rallies and things like fixed income and certainly things
01:40like commodities that have no income.
01:41It's not that's major handwits kicking in.
01:44So I look at this as we had good selling when they're yelling inklings and gold a few months
01:48ago.
01:48We had in Bitcoin a year ago.
01:49And now I'm getting the same inklings in all the and all the energy, particularly things
01:53like particularly things like heating oil.
01:55Heating oil just got way too high.
01:56Inklings.
01:57I don't get inklings.
01:58I guess that's why I'm not a trader.
01:59Yeah.
02:00No.
02:00Inklings is something traders definitely feeling.
02:02Selling when there's yelling.
02:03That's a new one.
02:03I had not heard that one.
02:04Thank you, Mike McGlone, for that.
02:06Let's talk a little bit about silver.
02:08Gold is down 3.4%.
02:10Silver down 4.7%.
02:12How does silver fit into the thinking today?
02:16Exactly.
02:16It's called the devil's metal for a reason.
02:19Scarlett, it's double the volatility of gold.
02:22It's called, you know, leverage gold.
02:24And silver got just way too high above 100.
02:26And everything before that might have been shows somewhat of a deficit.
02:30You have to kick in a normal supply demand model.
02:32When prices go up that much, it's shifted the surplus.
02:35So silver is going to do what it normally does.
02:37It makes people like me lose their hair.
02:38And I think it might go down to 50 initially.
02:40But typically, when it rallies at this velocity in Q1, it was the highest ever versus copper
02:45and versus crude oil.
02:47It'll be stuck in a range, not for years, but for decades.
02:51All right.
02:51What's the where's some value out there?
02:53What do you conversations of clients say?
02:55Hey, Mike, I'm looking for some some value opportunities in your world of commodities.
02:59Where do you where do where do you kind of push them?
03:02Well, I was speaking with Iowa Jersey today and that 10 year note yield pushing 5.25%.
03:06I'm a commodity guy.
03:08But I look over that, Mike.
03:09Well, that's a headwind for all commodities.
03:12And so to me, that's where, you know, I can't give investment advice.
03:15But compliance has never said I can't say focus on U.S. Treasuries.
03:18And that 10 year note yields very high.
03:21When you look at the 10 year yield, I mean, how from a trader perspective, how much higher
03:26do you see it going?
03:28Because that's kind of the one one of the unanswerable questions right now.
03:30Our colleague, Iowa Jersey, pointed out key resistance to 5.32%.
03:35But, Scarlett, I look at the macro.
03:36If you look at the price of gold versus a U.S.
03:39We have a Bloomberg Treasury bond index back to 1973.
03:42That price of gold versus bonds is the highest since 1987.
03:46So we have four decade extremes there.
03:49I look at that as relative value.
03:50The bottom line is the whole metal sector is a complete stock puppet.
03:54If stocks go down, metals are going to go down, too.
03:57And that's a bottom line.
03:58The number one thing that can pressure yields lower because stocks are so high.
04:01Here's one key fact.
04:02Stock market capitalization to debt in this country is about 2.1 times.
04:07That's the highest in about 25 years.
04:11Yes.
04:12Yes.
04:13Exactly.
04:15Bitcoin kind of all over place again here.
04:18Mike, I know you kind of structurally bearish on this thing.
04:21What's the what's the near term kind of catalyst in one way or the other?
04:26That a key headwind is don't fight the Fed.
04:29Bitcoin is a highly volatile, highly correlated stock puppet.
04:32The whole sector.
04:33Cryptos are very much stock puppets.
04:35It's just beta in that space.
04:36Stock market goes down.
04:37It's probably going to go down.
04:39A key thing, it's already flunked the test this year.
04:41It's down about 5% with the stock market up almost 15%.
04:44I think it's a leading indicator on the bottom line.
04:46The best late dates for Bitcoin was in 2020.
04:49So we had the best, you know, we had massive pumping of liquidity.
04:52We got the 10-year note down to, you know, half a percent.
04:54Both have gone up 10x Bitcoin and the 10-year note yield.
04:57And I think the thing is there's just too much of a headwind for these type of assets now
05:01with 10-year yield around 5% and 2-year notes pushing 5%.
05:05Mike, when you talk to clients, when you get emails and IBs from clients, what's the one thing that they're
05:11asking you about?
05:13Well, the key thing is crude oil right now and energy.
05:16And I had a good one this morning.
05:17We were discussing the essence of there's one human being.
05:20Our president is responsible for this war in Iran.
05:23It's a major issue now in the elections.
05:25It's a major issue in inflation and energy.
05:28And what's going to take to stop it?
05:29And I fully expect something they're going to try to do to alleviate that.
05:32But if he doesn't, come after the midterms, you can get elected now by saying you're going to push back
05:37on the war.
05:38After the midterms, there'll be some kind of detente, whatever.
05:40Something has to happen.
05:41In the meantime, the supply and demand balances are increasing.
05:44And, for instance, the largest energy producer on the planet, the U.S., major surpluses in clean-
Comments