Transcription
Canada had a blowout unemployment number last week, and Canadian rates are ripping. Australia had a CPI number. Australian rates are ripping. New Zealand rates are ripping.
We've got a major technical move in US 10-year yields with a rate cut expected on Wednesday. JD, I don't think the rate cut is a done deal. I see a scenario next year where we're going to have headline inflation. You get the air let out of the tech bubble, and then commodities get that liftoff. That's a scenario I think about all the time.
The TG Macro First Conference in Nashville in February of 2026 is shaping up to be a very serious investor event. I am totally blessed to be able to say that we've got John Johnston, Doomberg, Dillian, Grant Williams, Brent Johnston, Harris Copperman, and myself as speakers. We're going to talk about the opportunity set for 2026. Maggie Lake is going to host the event for us, and we are on pace to sell the conference out. So, run, don't walk, to sign up for that.
What's happening, good people? We are here to record Macro Dirt number 76 with my man, Jared Dillian. How are you today, brother?
>> What is up, TG?
>> It's a lot going on today, huh? JD, take the reins. You laid out some, um, global macro stuff that's happening. We're seeing a little bit of volatility right out of the gates today on Monday. Talk to me.
>> Yeah, it's a great story. It's a great story. And we talked a little bit about this last week. I think I pointed out that chart that Hela Mistler pulled up of the head and shoulders bottom in tens, 10-year yields.
>> Yep.
>> Um, yields are shooting higher today. So here's what's going on. So Canada had a blowout unemployment number last week, and Canadian rates are ripping. Australia had a CPI number. Australian rates are ripping. New Zealand rates are ripping. Now, there's actually a 20% probability of an ECB rate hike next year. You know what's going on in Japan, right?
>> Yeah.
>> So rates are coming up across the globe. And as of today, 10-year yields have broken the downtrend. Broken the downtrend. You can pull up that chart if you want.
>> Yeah, we'll absolutely post that chart today for sure. We got the dollar has gone bid. There's a bit of a macro gyration going on. They're setting metals back in their place. [snorts] Um, it's fair to say that this is a breakout day in 10-year yields. We're breaking out above the 100-day moving average for spot 18 last. We're above the whole range now, or at least we're at the top of the range that we've been in since September. So, this could be a serious breakout. It's kind of, you know, it's amazing that with that and the I, I guess the idea that more rates are going to rise, commodities are, there's a pretty big pullback in the commodity space today as rates scream. What do you think about that, JD?
>> Yeah, it's funny because, uh, there were some newsletter guys that were sharing some commodity charts over the weekend. They were getting a boner for it. Yeah. And, uh, [laughter] and, and I was, it's funny because I was saying to myself, you know, if you look at the, if you look at the chart of the BCOM, it's been in an uptrend for the last year and a half. It's not like a steep uptrend, but it's been in an uptrend. You've had higher highs and higher lows. And I'm thinking to myself, like, TG and I called the bottom, like the ding-dong lows back in September of last year, you know?
>> Yeah. Yeah.
>> We had, we had just started the podcast, and we were like huddling up and like, what, you know, we were like, "What's top of mind?" And we can, we're like both looking at each other saying, the commodity chart, man. Like, this is it. So you're right. We, we climbed right out of those lows, which was a little bit of a good call that we can pat ourselves on the back on. Um, you know, everybody around now is noticing that it's been a flywheel of commodity strength. It was gold, and then platinum, and then silver, and then copper, and natural gas, right? And so now the chart is at levels that were breaking away from, you know, out of the recent range. It's getting some positive press in on the street, and now all of a sudden we've got Mr. Bond Market coming back and saying, remember who's in charge here, right? It looks like [laughter] Japan is the center of gravity for that, right? So rates are flying higher there. The spread between Japan and the US is closing rapidly. And now all of a sudden we've got a major technical move in US 10-year yields with a rate cut expected on Wednesday. JD, talk to me about how this is going to play out. Like
>> talk to me first. I have my ideas after that.
>> So I posted on Twitter, and this was a very dumb thing to post. Sometimes I post dumb things.
>> Yeah, me too.
>> But I said, I said, I don't think the rate cut is a done deal. Well, well, look, it's a done deal. It's like a 96% chance. The Fed never surprises anybody that much. And if they did, they're going to tell Nick T ahead of time, right? So unless we get a Nick T article tomorrow, I think the Fed is still probably going to cut, but I think it's going to be a very hawkish cut, right? I think there's going to be some language that, I mean, gee whiz, you know, the economy is still pretty strong. So I don't, you know, I think beyond 2025, I don't think we're looking at a bunch of rate cuts next year. I think it's going to be a hawkish cut. Can we talk about next year for a minute?
>> Yeah.
>> I want to be a little bit proactive on this because it feels like if we just take a step back, and I was talking about this with Zack Abraham on his podcast, which is excellent. If you take a step back and you see how the tech is blown a bubble again in AI, right, at some level, and you look at this commodity chart percolating, and you've got the president demanding rates lower, right, which is just like out of touch with reality now, obviously, right? Could you see, I see a scenario next year where we're going to have headline inflation because eventually, you know, eventually some of the commodity pricing might creep into headline inflation. You get the air let out of the tech bubble, and then commodities get that liftoff out of this five-year range. Right?
>> So I, I feel like that it may not be on the tape today, but I feel like that's the trade that we could be set up for next year. And I want us to be on the tape verbalizing that because we've been so far ahead of everything else that's going on. Knock on wood. So, let's try to stay ahead of it if we can. What are your thoughts on that?
>> No, I, that's the kind, that's a scenario I think about all the time. I mean, if I were to, I mean, you know, you know what we got to do is, you know, it's getting towards the end of the year.
>> Yeah.
>> When we do, when we do the last Macro Dirt podcast of the year, we got to do some predictions for next year.
>> Definitely.
>> And the end-of-year predictions are always terrible.
>> Terrible.
>> It's so hard. They're so hard. [laughter]
>> But we got to, we got to try. We got to try.
>> Yeah, we do. I, I literally, I read everybody else's year-end, and I feel the pressure as a writer to come up with one, and then I find myself curled up in a ball under my desk sucking my thumb because I really, I don't, I can't see out that far. I give people who can a lot of credit. The best in it, the best in the game at it is Nick Sakius at Bernstein. Man, he does it end-of-year. He does it consistently. He bangs eight out of 11 points that he makes right every year, and you're like, "Oh my god, how good is this guy?" So, we're gonna try to do some, maybe we'll get his and read it next year, not the year-end [laughter] one.
>> Um, but we'll definitely reference that. That, that is a great idea. We'll make the same year-end predictions. Outstanding call. What, um, stocks, not too much to talk about. If we, if we look back at last week, um, we had commodity leadership. You know, oil services were strong, uranium was strong, natural resources ETF was strong. There was a little bit of weakness in technology, but semiconductors were up there in the leadership. So was software. So it was kind of a mixed bag where, um, the indices were up a little bit on the week. We're right back down to probably where they started, pretty much around S&P 6850. Are you still leaning lower, JD?
>> On what?
>> On stocks. Sorry. Stocks, S&P. You, you had been bearish and kind of bounced back. I didn't know if you were totally fair.
>> Uh, I'm getting my ship pushed in on a single name here.
>> Are you?
>> Um, Carvana.
>> Added to the S&P 500?
>> Uh, I, I, I own the puts, and the puts got vaporized. And, uh,
>> Oh, yeah.
>> Yeah. And there's upgrades and all kinds of stuff like that. That's a loser. That one goes in the L column.
>> Yep. You know what? It's good that you can recognize that, right? Because we're traders, and the best of the traders out there are only getting things right 55% of the time, right? But you got to know where to put your eggs all in the basket that are right, and stay, keep the eggs from getting broken in the basket that are wrong. Um, the Carvana thing is just one of those things where you had the chart working for you, and then obviously leading into this event is what this explosion was all about, right? Leading into the S&P inclusion, they get a word on it, they start buying it, and the next thing you know,
>> it's trading at a new all-time high. So, that's unfortunate. But the rest of the rotation today, it looks like, uh, the downside leadership is basically industrial metals, housing sector is off. Commodities, as we mentioned, is off. Gold miners are off. They may have peaked for the year. They had a lousy week last week among commodity strength. So that was a light tell in the miners.
>> I got to tell you this, you know, we broke out from that pennant in gold,
>> and the price action has been dog. Yeah. It's been very uninspiring, you know. So, we have a clearly defined stop. There's no reason to sell until you get to the stop. But I, I am just, I am very disappointed with this move, you know.
>> Yeah. Yeah. You know, it's, it's kind of, I, it's funny. You're disappointed, and I'm encouraged. I like the fact that gold is holding in, holding value at the highs is very hard, right? Because the longer the thing is, the longer any security is teed up at the highs, the more wise guys come out of the woodwork and take a swing at it, right? And if there's no upside catalyst, it's hard for bull markets to keep rallying sometimes after they made a big move. Now, we're consolidating. So the consolidation can go on. But I like the fact that gold's changing hands here. Silver's breaking to all-time highs. Gold's in its range. Feels completely safe to me. So I like that idea in terms of like, I guess sitting, I, I guess the gold that I'm long, I don't mind having low volatility on. You know what I mean? Like, it's not going to perform like Bitcoin in 2017 all the time, right? It's just not.
>> So, um, what else do we need to touch on in the markets? JD, we covered rates fairly well. Commodity story, equities, dollar index. Where's your? There's one thing I want to say about the dollar.
>> Let's do it.
>> Um, you know, in a world where Canada might be raising rates, Australia might be raising rates, New Zealand might be raising rates, Europe might be raising rates, Japan might be raising rates, and we're putting Kevin and Ha, Kevin Hassett in charge of the Fed, and we're talking about cutting rates. Like, what does that do to the dollar? Like, the dollar in that scenario, the dollar should absolutely get taken to the woodshed, you know?
>> Absolutely. I agree with that. So maybe we have to pay attention to what's not happening here, which is always important in markets. Um, you just got me so bearish the dollar, I can't see straight, right? It's like, no, literally, you know, with between Hassett at the Fed and everybody else talking about raising rates, and then what's going, what's the Fed going to have to contend with if we see a scoch of headline inflation? Donald John Trump on the line. Don't think of raising rates, you fs,
>> right? [laughter]
>> No. So I'm just saying, like, no matter what, like, we're going to be the lag dog if there is an inflation spike
>> in terms of addressing it. The boss is just going to keep the heat on Hassett and be like, dude, talk more about Fed independence, and if we move rates, you're a dead man. [laughter] Seriously, that's just what I see happening in my brain, but I could be dead wrong. All right, good points all around. Good points all around. Um, do we need to go off markets, JD?
>> Yeah, let's do it. December 8th, I got to talk about this. I love, I, I use, I look back on history every day for writing study break. December 8th in music history. We're going to do a little rundown, and you and I are going to riff on some of this stuff. Okay.
>> Going backwards in time, Dimebag Darrell and John Lennon were both gunned down on December 8th. Dime, Dimebag Darrell in 2004 by a crazed fan as soon as the fan in Columbus, Ohio at a club. As soon as they went on stage, some deranged fan came out and gunned down Dimebag Darrell, and like two other people died. Horrible story. I remember the day John Lennon was shot. Do you?
>> I was fine.
>> You were a little bit too young.
>> Yeah.
>> Yeah. Yeah. Yeah. Well, I was 12 and very impressionable, and I remember being like, "What? One of the Beatles is dead?" Like, that freaked me out. Also going backwards, Corey Taylor, side note, the lead singer of Slipknot, was born 1973. Sinéad O'Connor was born 1966 on December 8th. Right. She's got a great quote. An important thing about brave, it doesn't mean you're not terrified. Right. What did you think of her?
>> Love Sinéad O'Connor. She's one of my favorites. Love her music. Love everything, you know.
>> Yeah.
>> Um, you know, it's, it's funny because [snorts] now I'll just leave it at that. She's
>> like when I, that, that video she had for "Nothing Compares 2 U"
>> is one of the most hauntingly beautiful videos I have ever seen. If it's ever on, you have to watch it. You can't look away. Yeah.
>> It's one of the most amazing things you've ever seen.
>> That song is a total trance,
>> and it, and it's really beautiful. So yeah, she was super talented and, and died young, right?
>> Uh, she was in her 50s, I think.
>> Was she still young, man? Still young nowadays. Still young.
>> Um, so getting back to it, December 8th, 1958, Def Leppard guitarist Phil Collen was born. What's your favorite Def Leppard song, JD?
>> Uh, I know. I knew that was coming. [laughter]
>> It's, I know it's not your wheelhouse, but I knew that I could get you to say that. Mine is "Bringing on the Heartache." Uh, "Bringing on the Heartbreak," excuse me, which is one of their old ones. It's 1953. Sam Kinison is born on December 8th. Maybe the best stand-up comedian of all time, or for me, up there in the conversation. His stick was legendary, right?
>> Legendary.
>> Legendary. 1950, Dan Hartman, the guy that wrote "I Can Dream About You," was born. 1947, December 8th, Greg freaking Allman is born. Wow.
>> Right. Yeah. I have a lot of personal experience when the Allmans used to post up at the Beacon for like nine nights, um, a year. I used to probably go see five or six of them and post myself right up on the left, right between Greg Allman and Derek Trucks. And that was the best seat in the house for me. And man, did I enjoy listening, watching, uh, listening to that guy sing. December 8th, 1943, Jim Morrison is born.
>> Wow.
>> So, like, how many unbelievable people in music? And then to add the last two, 1942, Toots Hibbert of Toots and the Maytals is born. Great, great, um, album they had out.
>> I think my wife would say my nickname is Toots.
>> Toots? Is that right? Okay.
>> You walk around the house with a toot machine on. [laughter] And then last but not least, December 8th, the 10th of these cultural events, Sammy Davis Jr.'s birthday as well. Is that unbelievable how that lines up? How all these famous people are born on the same day? It freaks me out to some level because on some days you'll do this research and find that there was nobody even remotely famous except some like soap opera star.
>> So, who was, who do you share a birthday with? Anybody famous?
>> Literally nobody famous. You know who else has a birthday of November 15th? Like Edner from, like, literally, like, I don't think anybody. How about you?
>> Uh, Alan Greenspan.
>> Oh, is that right?
>> March 6th, Alan Greenspan, and also Ed McMahon.
>> Oh, really?
>> Yep.
>> And you know what I think we're going to do, JD? I think we're going to wrap it up on that. That was a great ending. Um, the, the, the culture history stuff. I think we covered the markets fairly well. Thank you, dual subscribers. You guys are the best. The hits keep coming, and we appreciate that. Like and subscribe the Macro Dirt Podcast. Join us in Nashville, February 19th and 20th, where JB, JD will be speaking at my first conference ever. And until then, Asta La Pasta. Good people. Asta La Pasta.
>> [music]