Episode Summary
Executive Summary: Macro Voices centers on Michael Every’s thesis that global markets are being reshaped by geopolitical and geoeconomic statecraft, not traditional macro data. He argues the U.S.-China rivalry is pushing the world toward bloc formation, capital controls, industrial policy, and financial tools like stablecoins. The post-game links this framework to positioning in equities, FX, commodities, uranium, and a relative-value short of Korean tech versus Nasdaq.
Main Topics: U.S.-China geoeconomic rivalry and bloc formation: Every argues the world is moving toward a long-lasting contest between a U.S.-centric and China-centric system, with trade, industrial policy, and security increasingly intertwined. Economic statecraft replacing market-led globalization: Tariffs, subsidies, export controls, FDI screening, capital controls, and currency tools are becoming standard instruments of policy on both sides. Stablecoins and the dollar’s strategic role: Dollar stablecoins are framed as geopolitical infrastructure that could reinforce U.S. financial dominance and help reindustrialization efforts. Military and commodity chokepoints: The discussion emphasizes rare earths, energy flows, shipping, chips, and industrial inputs as strategic leverage points in a de facto economic war. Market implications: AI, inflation, and sector rotation: AI is portrayed as simultaneously inflationary and deflationary; markets may stay buoyant near term, but secular inflation and policy intervention could alter leadership. Trade of the week: short Korea vs long Nasdaq: Patrick recommends a relative-value trade fading the narrow, AI-driven Korean tech rally versus more diversified U.S. tech exposure. Technical backdrop across major assets: The post-game reviews SPX, DXY, oil, gold, uranium, and Treasuries with a cautious-to-bullish near-term bias in equities and a watchful stance on rates and commodities.
Key Arguments: The U.S. and China are in a strategic competition that is likely to persist for the rest of investors’ lives, not a temporary aberration. The current period is better described as a ceasefire to rearm than a genuine peace or durable G2 arrangement. Globalization has shifted from free-market efficiency toward state-directed security, resilience, and bloc alignment. The U.S. cannot simply “talk tough” without first rebuilding industrial and resource vulnerabilities; it is simultaneously trying to reshape allies, China, and its own economy. China’s leverage comes from rare earths, manufacturing depth, and export dependence; the U.S. leverage comes from financial dominance, high-end chips/software, and alliance structure. Capital controls are likely to expand, including controls over outward capital flows and directed foreign investment into the U.S. Dollar stablecoins may become a key geopolitical tool to reinforce the dollar system and channel capital into U.S.-aligned priorities. Markets will increasingly reflect policy goals rather than pure price discovery, creating a more segmented, ‘safari park’ environment. AI is both inflationary (power demand, capex, scarcity) and deflationary (labor displacement, potential concentration of profits, asset-price disruption). Korea’s tech rally is seen as too narrow and too dependent on memory chips and geopolitically exposed supply chains, making it vulnerable relative to Nasdaq.
Data Points: SP 500: 6796 - Down 136 bps week over week, consolidating off recent highs. U.S. Dollar Index (DXY): 99.92 - Up 80 bps and testing the 100 level. WTI crude (Dec): 59.60 - Down 146 bps; near the $60 area. RBOB gasoline (Dec): 194 - Up 265 bps week over week. Gold (Dec): 39.92 - Down 20 bps; noted as holding above its 50-day moving average. Copper (Dec): 498 - Down 532 bps. Uranium: 7875 - Down 296 bps. U.S. 10-year Treasury yield: 4.13% - Up 5 bps. EWY ETF performance since April lows: up more than 100% - Patrick cites the Korean equity rally from Liberation Day lows. Nasdaq 100 performance since April lows: roughly 50% - Used as the comparator in the long U.S. tech / short Korea trade. Korean implied volatility: 44% - Patrick says EWY implied vol has doubled over two months from 22%. Korean implied volatility prior level: 22% - Referenced as the earlier volatility level for EWY. QQQ implied volatility: around 20% - Used to contrast with the higher volatility in Korea. Gold prior move: $1,000 rise - Eric references the prior run from $3,400 to $4,400 after a similar technical setup. Gold prior range: $3,400 to $4,400 - Used to illustrate the previous measured move in the gold bull market. Breadth: about 40% of stocks above their 50-day moving average - Eric and Patrick highlight weak internal market participation. U.S. market concentration: Mag-7 dominance - Used to describe reliance on a few mega-cap tech names. AI and valuation comparison: NVIDIA market cap exceeds Germany GDP; Microsoft exceeds France GDP - Eric uses this to illustrate the scale of AI enthusiasm. Crude technical level: $62 - Patrick identifies this as a key upside breakout level for WTI. SPX downside trigger: below 6700 / below 6600 - Eric highlights these levels as key risk zones for systematic deleveraging.
Pivotal Quotes: "I think what we have here is a ceasefire to rearm, if you will, quite literally." — Michael Every: Describing the Trump-Xi outcome and broader U.S.-China strategic posture. "Markets will be moving from a world where they can do whatever they want... to a safari park." — Michael Every: Explaining his view that policy will increasingly corral capital and trade within designated lanes. "These dollar stablecoins are... entirely geopolitical." — Michael Every: Arguing stablecoins are infrastructure for a redesigned dollar-centered financial order.
Implications: Investors should expect more policy-driven markets, tighter capital flows, and greater bloc segmentation. Near term, AI and U.S. tech can still lead, but relative-value opportunities, commodity bifurcation, and geopolitical shocks may dominate returns.
From the Episode
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. 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 monetary.
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 SP 500 is domestically owned by Americans. And American institutions, but a lot of it isn't. And if there was suddenly, you know, tomorrow morning, everybody who's not in a certain category has to divest 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 U.S. quite the
On this particular topic. I know that he's just published a really, really great paper 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 stablecoins 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 will 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 reindustrialize and where instead of the offshore, currently fiat Euro dollar being the tail that wags the US dog.
About Macro Voices
Weekly market commentary by Hedge Fund Manager Erik Townsend and interviews with the brightest minds in the world of finance and macroeconomics. Made possible by funding from Fourth Turning Capital Management, LLC