MacroVoices #554 Dr. Anas Alhajji + Louis-Vincent Gave: Developing Crises in Middle-East and France

Deutsche Bank

• Patrick Ceresna · Big Picture TradingBearish

  Deutsche Bank faces a more challenging European environment, so it is the short leg of the pair.

  European financials have more than doubled the US sector's gain since the Liberation Day lows, and Gave argues French fiscal stress and expensive energy could undermine that recovery through funding costs and credit quality. Deutsche Bank's US shares, at about $32.39, carry more direct exposure to that European environment than JPMorgan does. Ceresna therefore shorts Deutsche Bank against a long in JPMorgan. He caveats that the short leg has asymmetric risk, since its profit is capped while losses from a sustained rally are open-ended. He suggests a call at a $36 strike expiring April 2027 to limit that loss.

  “So in this trade, we're expressing a preference for JPMorgan's earnings resilience against Deutsche Bank's exposure to more challenging European environment.”at 1:17:29

JPMorgan Chase & Co.

Across the shows: 2 speakers in other episodes, 2 bullish and 0 bearish calls, past 30 days

• Patrick Ceresna · Big Picture TradingBullish

  JPMorgan's earnings resilience should let it outperform European banks in a long-short pair trade.

  European financials have run far ahead of US ones since the Liberation Day lows. The EUFN European financials ETF is up about 57% versus about 27% for the US financial sector through XLF, more than twice the gain. Ceresna links this to Gave's argument that France's fiscal and political problems, expensive energy and limited policy room could spread through Europe's financial system, hitting funding costs, credit quality and the sustainability of recent earnings growth. He recommends a dollar-neutral pair, long JPMorgan and short Deutsche Bank at about 10.3 Deutsche shares per JPMorgan share. The trade rests on JPMorgan's earnings resilience against Deutsche's exposure to a harder European environment. He notes the pair still carries company and market risk, and suggests an optional call overlay to cap the short leg's losses.

  “So in this trade, we're expressing a preference for JPMorgan's earnings resilience against Deutsche Bank's exposure to more challenging European environment.”at 1:17:29

VanEck Semiconductor ETF

Across the shows: 3 speakers in other episodes, 1 bullish and 2 bearish calls, past 30 days

• Patrick Ceresna · Big Picture TradingBearish

  The semiconductor ETF has fallen 16% from its peak as many AI stocks break down.

  SMH tried an early breakout a few weeks ago but has fallen 16% from its peak over the last two weeks. The memory-stock ETF is at six-month lows. Ceresna says many AI stocks have broken badly, even though the hyperscalers are doing well. He treats the semiconductor weakness as the underlying AI pressure, and expects it to persist until the AI stocks find a durable bottom.

  “the semiconductor index using the SMH attempted an early breakout a few weeks ago, but over the last two weeks has been off of its peak down 16%.”at 1:22:40

Oil & fuels

• Anas Alhajji · Energy Outlook Advisors

  Saudi Arabia plans a 10M bpd bypass network, including a pipeline to Oman that avoids the Gulf and Red Sea.

  Saudi East-West pipeline capacity was raised from 5.5M to 7M bpd and the Saudis want total pipeline capacity circumventing Hormuz at 10M bpd. The planned route runs through the Empty Quarter to Oman, so crude reaches the Arabian Sea and Indian Ocean without passing any waterway, and Iraq and Kuwait could connect to it. Saudi officials think it can be finished in two to three years if permits and studies clear. The Saudi gas line can also be converted to carry about 1.2M bpd of oil in summer months, adding optionality.

  “what they want to do basically is... build a pipeline through the empty quarter to Oman. So that will go directly to the Arabian Sea and to the Indian Ocean without going through any of the waterways, and it goes to Asia directly.”at 5:23

• Anas Alhajji · Energy Outlook Advisors

  The diesel shortage will persist because Gulf refinery output lost to the conflict has not been recovered.

  Wright said only 25-35% of pre-crisis product flows, against 80-90% of crude, were moving through Hormuz. Anas argues the diesel lost from Gulf refineries has still not been recovered. The shortage compounded: Gulf refinery losses, then panic that led countries to ban petroleum product exports, then ships rerouted with more product on water than reaching destinations, then trader hoarding. He expects the diesel crisis to stay for a while, and says ending one war will not end the other dimensions of the crisis.

  “And this is where the problem is, we talk about the diesel crisis, that's where it is really. We are not able to recover the diesel we lost from The Gulf until today.”at 11:57

• Anas Alhajji · Energy Outlook Advisors

  Energy security needs costly redundancy and diversification, adding volatility that no energy outlook captures yet.

  Ministers talked about resilience and diversification, but Anas argues resilience means costly infrastructure redundancy. Diversification means more volatility, because buyers switch between domestic and imported supply as prices move. Renewables, EVs and batteries get additional growth, but coal, oil and gas become more entrenched. None of this is incorporated into any energy market outlook yet.

  “So infrastructure redundancy and diversification is the name of the game now to ensure energy security... None of that is incorporated in any energy markets outlook yet.”at 18:21

• Erik Townsend · MacroVoices

  Refinery strikes could trigger a global crack-spread crisis that new refinery builds, taking about ten years, cannot quickly fix.

  The West already lacked enough refineries before the war, and crude is only useful once refined into finished products. Erik argues that if refineries keep being targeted, the world faces a crack-spread explosion. A new refinery usually takes about ten years to build from scratch, and the global economy cannot go ten years without refining capacity. He says he is disgusted by people cheering refinery destruction in Russia, and notes that EU leaders are openly cheering it.

  “That means the whole world is going to have a crack spread explosion problem that I don't think can be solved until you build new refineries... usually it takes ten years to build a new refinery from scratch.”at 22:28

• Anas Alhajji · Energy Outlook Advisors

  Attacks on Russian refineries will hurt global consumers and farmers, not just Russia.

  Refinery capacity has already been lost in California, in Germany, and in the Gulf (a UAE refinery was hit in March and April). Attacking Russian refineries removes more product supply, which Anas says will hurt people in Africa, South America, Egypt and Kenya, including farmers. He argues the diesel crisis follows from these lost refineries, and the media has underplayed the problem.

  “it was very clear that attacking the Russian refineries is going to hurt people around the world and is going to hurt farmers in Africa and South America”at 23:18

• Anas Alhajji · Energy Outlook Advisors

  Media ignored the 800,000 bpd Black Sea diesel loss while obsessing over the Jazan refinery attack.

  The Jazan refinery attack does not affect crude flows and sits far from the oil and ports. Yet the media fixated on it while crude losses of about 3M bpd and 800,000 bpd of Black Sea diesel went largely unreported for months. Anas says the Black Sea problem is serious and only got media attention after Trump raised it, accusing Zelensky over diesel shortages.

  “at the time when we lost 3,000,000 barrels a day of crude, and we lost 800,000 barrels of diesel in the Black Sea, and the media ignored that completely.”at 25:18

• Anas Alhajji · Energy Outlook Advisors

  Drought-driven river shortages are disrupting barges, cutting French nuclear output and raising diesel demand.

  Drought and low water in European rivers closed nuclear plants and raised diesel use in France, increasing demand at the wrong time. Low water also stopped barges from delivering petroleum products, causing a logistics crisis. Indonesia's largest river is similarly low, blocking palm oil barges that supply biodiesel. Anas says these weather-driven shortages came on top of the refinery crisis and the loss of ethanol and biodiesel.

  “We have the drought, we have low water levels in the European rivers that closed nuclear plants and led to higher diesel use in France”at 27:08

• Erik Townsend · MacroVoices

  Backwardation narrowing while flat prices rise signals the market expects the tightness to last a long time.

  The back of the futures curve is catching up to elevated front-month prices, so backwardation is narrowing even as the flat price rises. Erik says that is a very unusual way for backwardation to resolve. He reads it as the market realizing the disruption will last a long time, which he links to the refinery problem and the Paul Sankey interview.

  “the back of the futures curve is really starting to catch up to the elevated front month prices... It says to me that the market is realizing this is going to last a long time.”at 31:38

• Erik Townsend · MacroVoices

  A China-first export ban on refined products could put the rest of the world in a very hard position.

  Paul Sankey says most remaining spare refining capacity is in China. China has signaled a China-first approach that would ban exports of finished products and keep them for domestic use, exporting only what keeps the global economy from crashing. Erik doubts China would crash the global economy on purpose, since it depends heavily on exports. Still, he argues such a policy would leave the rest of the world in a very hard place, given that the crack spreads are globally set.

  “China has just signaled their willingness to take a China first approach that says, We're going to ban all exports of finished products and keep them for our own use in China... If China were to adopt that policy, it seems to me that they could really put the rest of the world in a really hard place.”at 32:20

• Anas Alhajji · Energy Outlook Advisors

  China is controlling refined-product exports because its below-world domestic prices push refiners to need exports.

  Chinese refiners lose money daily because China sets domestic product prices below world prices. The only way to earn money is exporting, which China controls through quotas and, in some months such as October, outright export bans. Anas argues China was enabled to gain this control, not that it planned it: European leaders and California's refinery closures reduced global capacity. Gulf refinery outages mean the world still needs those refineries' output.

  “Chinese refineries basically are losing money every single day. And what China basically has done is they set the product prices below world prices within China, so refiners basically lose money on that.”at 33:47

• Anas Alhajji · Energy Outlook Advisors

  Global oil demand is declining; US demand growth has flatlined versus expectations of gains this year.

  Before the war, the IEA expected US oil demand to rise about 160,000 barrels a day in 2026 and OPEC expected about 110,000. Monthly data for the first seven months show US demand growth year over year averaging virtually zero, so the expected growth has disappeared. Worldwide demand is also declining. He distinguishes demand destruction, which cannot be recovered, from decline, which can recover over time, and argues the drop is a response to higher diesel, gasoline and jet fuel prices. He also expects a recession that will only show up in data after two quarters of decline.

  “Now we have data, the monthly data for the first seven months of the year. The average of the first seven months in term of oil demand in The United States year over year is virtually zero.”at 40:39

• Louis-Vincent Gave · Gavekal

  Diesel prices have already doubled, hitting French consumers and fuelling popular anger.

  Economic activity is energy transformed, and consumers use gasoline, diesel and jet fuel, so diesel prices feed into food prices and everyday costs. Diesel prices have already roughly doubled, which is likely why the French economy is starting to suffer. Rising prices create popular anger, and if they keep rising, it is hard to see how the political, fiscal and economic situation improves.

  “the idea that economic activity is energy transformed lies at the very core of a lot of our work.”at 1:11:55

• Louis-Vincent Gave · Gavekal

  Governments are nearing the limit of their ability to cushion consumers and businesses from the energy crisis.

  Western governments have spent about nine months telling consumers and businesses to carry on as normal and cushioning them from the wars, while China tightened hard and slowed its economy. Gave argues this has a limit. He cites China returning to the oil market after months on the sidelines and crack spreads rising every day as signs of strain. If the energy crisis runs into 2027, the open question is who gets cut off from oil, diesel and gasoline. He thinks the answer is not the frontier economies investors usually shrug off, but Europe.

  “And, yeah, if we are reaching the limit, and for what it's worth, I think we are reaching the limit. The fact that China is now back in the market buying oil when it wasn't for months on end.”at 1:13:51

• Patrick Ceresna · Big Picture Trading

  Oil remains in a bull trend with depleted inventories and unloved positioning; a breakout would lift inflation expectations.

  WTI's front month has consolidated, but contracts further out the curve, to April 2027, have risen without a correction. Backwardation is flattening, and inventories remain depleted, so the market stays tight. A de-escalation scare was quickly squashed and barely moved oil. Positioning is unloved: the commitment-of-traders data shows the 23rd percentile over three years, and gross longs have not built up. Gross shorts remain at multi-year lows. Ceresna argues a meaningful oil breakout would hit inflation expectations, could unsettle bonds, and could trigger risk-off moves.

  “Overall, oil remains the macro catalyst because if any meaningful breakout was to happen on oil, it's going to have huge impact on inflation expectations,”at 1:30:33

Europe's economy

• Anas Alhajji · Energy Outlook Advisors

  EU fuel subsidies prop up growth, but Europe cannot subsidize its way out of the energy crisis.

  In the second quarter the EU alone spent about $16 billion in additional fuel subsidies. That government spending fuelled growth and offset higher prices. He argues the EU cannot subsidize itself out of the crisis, and that once the subsidies decline a recession will follow.

  “the EU alone spent in term of subsidies on fuel, $16,000,000,000, just fuel subsidies... Europe, basically, the EU cannot subsidize itself out of the crisis.”at 42:13

• Louis-Vincent Gave · Gavekal

  France cannot raise taxes further: its tax take is about 44% of GDP, so higher rates would bring in less.

  France runs budget deficits near 5% of GDP, which he compares to the US running about 7%. The difference is taxation. France's total tax receipts are about 44% of GDP against roughly 24-25% in the US. France is on the wrong side of the Laffer curve, so raising taxes to close the deficit would raise less money. A parliament split into three blocks that cannot pass a budget makes this worse.

  “France's ability to increase taxes is essentially zero. France's total tax receipts account for roughly 44% of GDP... So right now in France, we're on the wrong side of the Laffer curve.”at 50:51

• Louis-Vincent Gave · Gavekal

  No French presidential candidate proposes the two fixes: a retirement age of 70 or currency devaluation.

  France needs to do one of two things: raise the retirement age to 70, which is very hard, or devalue by about 50% as an emerging market would. Inside the euro, devaluation is not possible. No candidate in the coming presidential election proposes either option. The only candidate offering a major change is the far-left Mélenchon, who calls for defaulting on debt. Defaulting alone would not be enough, since a currency adjustment or retirement reform would still be needed.

  “one of the very disappointing things of this French presidential election that is coming up in six months is you have lots of candidates, but not a single candidate to propose either of these options.”at 1:00:52

• Louis-Vincent Gave · Gavekal

  The euro would struggle to survive a French default, restructuring or exit from the currency.

  Any of a French default, restructuring or euro exit would inflict catastrophic losses on European banks and insurers, and each country would need to nationalize its own debt. The ECB could monetize debt and the EU could take equity stakes, but the 2012 crisis was contained when Germany was a strong industrial paymaster and inflation was not a constraint. Today Germany is weaker, politics are more fractured, and inflation and energy shocks limit policy room.

  “It's very hard to see the euro surviving as it is today.”at 1:06:29

• Louis-Vincent Gave · Gavekal

  Germany has lost its industrial edge to China, so it can no longer backstop Europe's debts.

  In 2012 Germany was an industrial powerhouse that the world envied, and its mainstream parties followed similar policies. Now Germany faces the rise of the AfD, which wants to leave the euro and Europe and to reset relations with Russia for energy and sales. Germany is also losing to China on industry. This means Germany's ability to pay for Europe's problems, as it did before, is largely gone.

  “the global industrial superpower that it was back in 2012. Today, Germany is getting its lunch eaten by China.”at 1:08:04

• Louis-Vincent Gave · Gavekal

  Selling the euro against peripheral currencies is the smartest trade; most pay positive carry.

  Selling the euro against the Norwegian krone, Icelandic krona, Hungarian forint and the British pound earns positive carry, anywhere from roughly 150 to 500 basis points. The Norwegian krone also acts as a partial hedge if oil prices spike. Going long Asian currencies or buying euro-yen or euro-renminbi volatility, which is near record lows, are other ways to express the view. These trades let investors hedge against Europe blowing up without betting on the full catastrophe.

  “the smartest trade at this stage is to sell the euro against all the European peripheral currencies.”at 1:09:00

• Louis-Vincent Gave · Gavekal

  If the energy crisis persists into 2027, the European Union could be the economy that breaks apart.

  Gave's argument is that frontier economies such as Sri Lanka, Ethiopia and Pakistan have historically been the ones cut off from oil, diesel and gasoline, and investors have treated that as someone else's problem. If the energy crisis continues into 2027 and the cut-off reaches further, the damage would not fall on those small economies, which have little exposure to Western tech or AI spending. It would fall on the European Union, which would then be the bloc under real strain. This is a conditional view, so it depends on how long the shock lasts.

  “Of course, if the end result is actually... It's not the Ethiopians of this world that are breaking apart, but it's the European Union,”at 1:14:50

AI infrastructure & data centers

• Anas Alhajji · Energy Outlook Advisors

  AI infrastructure spending is propping up growth; a recession follows once that spending stops.

  Hundreds of billions of dollars are being spent on AI and data centers, and investment spending is a key driver of growth. That spending has kept advanced economies from entering the recession he expected. He argues the economy cannot rely on AI spending forever, so a recession is coming no matter what once that spending and the government subsidies stop.

  “We have massive spending on AI and data centers. ... We are talking about hundreds of billions of dollars being spent. ... So the AI basically saved the world for now in term of spending.”at 41:50

• Louis-Vincent Gave · Gavekal

  An end to the AI capex boom would be a massive tail risk for US growth and asset prices.

  The AI capex boom has been a major driver of US economic growth and asset price appreciation, and those gains have fed consumption. If the boom ends, the effects would spread through growth and wealth, which makes it one of several heads-or-tails risks facing markets alongside France and energy.

  “the tail risk on whether the CapEx spending boom in AI is coming to an end. And that's a massive tail risk if it is coming to an end since it's been such a driver of both economic growth in The US and asset price appreciation.”at 1:04:25

Credit markets

• Louis-Vincent Gave · Gavekal

  Most French debt is foreign-held, and buyers see holding it as a career risk.

  A majority of French government debt is held by foreigners. In recent client meetings, investors first asked at what yield to buy US Treasuries, and almost in the same breath asked who would be stupid enough to own French bonds. Owning French debt has not become a career risk. Because the crisis has been widely telegraphed, an investor who holds French bonds would look foolish if France restructured or the euro broke up.

  “a majority of our debt is now owned by foreigners. ... owning France and especially French debt has not become a career risk.”at 51:18

• Patrick Ceresna · Big Picture Trading

  Junk bonds are structurally weak as high-yield spreads break out higher.

  Junk bonds first sold off in line with the rise in rates across the board. Over the last few weeks, credit spreads have risen and broken out, so junk bonds now demand an extra risk premium over Treasuries. Ceresna says CoreWeave has added to this pressure. He concludes that junk bonds remain structurally weak. He is watching whether this turns into more meaningful stress in high-yield markets.

  “over the last few weeks we have seen a substantial rise and breakout in credit spreads, meaning that now junk bonds are starting to ask for and command an additional risk premium... so we're seeing at this moment that junk bonds remain structurally weak.”at 1:24:45

Banks

• Louis-Vincent Gave · Gavekal

  A French default would blow up the European insurance industry and probably global insurers holding French debt.

  A large share of French debt is held by European pension funds and European insurance companies. Japanese and US insurers also own it. If France defaulted or restructured, the first casualty would be the European insurance industry and likely the global one, since losses would spread across the holders.

  “if France goes down this path, the first thing you do is, essentially, you blow up the European insurance industry and probably the global because Japanese insurance companies, US insurance companies, a lot of people own French debt.”at 1:02:57

• Louis-Vincent Gave · Gavekal

  A French debt redenomination would hit systemically important French banks through euro-liability mismatches and derivatives.

  Three French banks, Societe Generale, BNP and Credit Agricole, are systemically important and large in derivatives markets. Their liabilities are in euros. If French debt were redenominated into a French franc that lost about 40% of its value, their assets would lose value against those liabilities, which could cause serious damage. Once you pull those threads, it is hard to know where the liabilities sit or what collapses.

  “the balance sheets of a lot of these banks, they have liabilities in euros. All of a sudden, their assets are redenominated in a French franc that loses 40%.”at 1:03:39

US stock market outlook

• Louis-Vincent Gave · Gavekal

  The US equity market is about 50% tech and communication services, an unprecedented concentration.

  The US equity market is about 50% tech and communication services, which he says is a concentration never seen before. Combined with the AI capex boom, this concentration means a stall in AI spending could hit equities and growth together.

  “you now have a US equity market, which is 50% tech and communication services, a level of concentration never seen before.”at 1:04:53

• Patrick Ceresna · Big Picture Trading

  Thin breadth and crowded Nasdaq longs make a first S&P 500 correction since Q1 possible if megacaps weaken.

  The S&P 500 is near 7,700, testing its 50-day moving average and its monthly lows. Breadth has fallen to about 20%, with four out of five stocks in downtrends and most AI stocks under pressure. The Magnificent Seven, roughly 35% of the index, has kept the index up despite this dispersion. Ceresna is watching expectations for the next Mag 7 reports, and a CTA selling trigger at about 7,600, roughly 1% below the market. Large speculators hit 100th-percentile net long positioning on the Nasdaq during its recent 52-week high, and that trade has since lost money. Money is also rotating into staples and healthcare. He says a unwind of these positions could bring the first correction since Q1.

  “And this is why we're watching very closely as we're at the 7,700 level on the S and P because if all of this starts to unwind, we may finally see the first market correction since the one we saw back in the first quarter.”at 1:23:29

Renewables & clean energy

• Anas Alhajji · Energy Outlook Advisors

  Net-zero policy undermines energy security, and Europe's shift back to old refineries shows it.

  Ministers, OPEC and Saudi Aramco's CEO all framed the situation as energy addition, not transition. Oil and gas stay the core, with solar and wind added. Anas argues the central message was that net zero means zero energy security. He points to Europe, which got stuck in the crisis, with Germany returning to old refineries it had closed under climate policy because of energy security.

  “net zero means zero energy security... Germany is returning back to those old refineries because of that energy security.”at 16:18

Agriculture & food commodities

• Anas Alhajji · Energy Outlook Advisors

  A poor Indian monsoon and El Niño are causing a global sugar crisis that will cut ethanol and raise fuel prices.

  A bad monsoon and El Niño have produced this year's worst sugarcane crop in about eleven years, per Anas. India is the largest sugar consumer and second-largest producer. When sugar prices rise, cane is diverted from ethanol to sugar. Ethanol, mandated in several countries including India, becomes short. Brazil, the top ethanol producer, will see the same effect, so ethanol and fuel prices will rise.

  “we do have a global sugar crisis, simply because of El Nino... the sugar king crop basically this year is the worst in, if I remember correctly, in like eleven years.”at 27:36

US–China relations

• Anas Alhajji · Energy Outlook Advisors

  China is exploiting Hormuz and Red Sea disruption to advance the Belt and Road and an Arctic route with Russia.

  Anas argues China wants Hormuz and Bab el-Mandeb to stay closed or semi-closed because disruption benefits the Belt and Road. He points to a news report on China and Russia advancing Arctic maritime cooperation, linking the Maritime Silk Road with a Trans-Arctic corridor. He presents it as an alternative to Hormuz, Malacca, Bab el-Mandeb and the Panama Canal. He adds that China-Russia northern-route oil trade is near record highs. This is his interpretation, and he presents it as a strategic read rather than hard evidence.

  “I think that China at this stage is looking at the Hormuz crisis and the Three Seas crisis and say, okay, how I can take advantage of that?”at 35:09

Airlines & aviation

• Anas Alhajji · Energy Outlook Advisors

  Passenger airline business has declined; only cargo is profitable, driven by AI-related shipping.

  Across airlines worldwide, everything related to passengers has declined as fuel prices have risen. The only profitable segment is cargo, which he attributes to AI, through the equipment and shipping it generates.

  “The only segment in the airlines that made money so far is the cargo. And why? Because of AI.”at 43:20

Russia & Ukraine

• Anas Alhajji · Energy Outlook Advisors

  Without Europe at the table, no Ukraine settlement can move forward.

  Most of the demands Zelensky makes of Trump are backed by the EU. When Trump pressured Zelensky to stop attacking Russian refineries, Zelensky publicly reported a new strike within twelve hours, which he could only do with EU backing. Each time Trump has pressured Zelensky on Russia, EU members, France, the UK and others have boarded Russian oil tankers, even though Trump's temporary, monthly-renewed sanctions exemption on Russian oil is still in place. The EU is therefore essential to any deal.

  “most of the problems and the challenges that Zelensky making to Trump are supported by the EU. So without Europe, basically, nothing is going to move forward.”at 44:45

Central banks outside the US

• Louis-Vincent Gave · Gavekal

  Market pricing three ECB rate hikes is wrong; the ECB will never deliver them.

  While France is in crisis, markets are still pricing in three ECB rate hikes. He argues this will never happen. The French fiscal and political crisis, and the pressure on the euro's survival, make a sequence of hikes implausible.

  “the market is still pricing in three rate hikes from the ECB. That's never going to happen. The ECB is never going to have three rate hikes.”at 53:11

European politics

• Louis-Vincent Gave · Gavekal

  Le Pen polling in the mid-40s signals a massive political shift in France.

  Violent riots in the cities of Zone B threaten the middle-class and metropolitan Zone A. Zone A is frightened and is turning to the rural Zone C for protection, which is why Le Pen is polling in the mid-40s. A massive political shift is coming. He argues Le Pen would take office in a fiscal and economic crisis with no money in the till, and that breaking heads in the cities will not fix the economy.

  “That's why Marine Le Pen is now polling in the mid forties. ... So we are going to see a massive, massive political shift.”at 59:54

US Treasuries & yields

• Patrick Ceresna · Big Picture Trading

  Bonds have likely set a short-term low after an oversold selloff, with yields pulling back.

  Bonds were incredibly oversold and have been bouncing from a short-term low. The 30-year yield, which was near 5.75% at its peak, has come down about 35 basis points over the last several weeks. That has produced a relief rally in yield-sensitive bond proxies such as utilities, staples and healthcare, with breadth improving. Ceresna's view is that the rebound is real on the short-term horizon, even though structural stress in junk bonds and private credit persists.

  “the bonds have established some sort of a short term low. They were incredibly oversold and they've been bouncing.”at 1:23:47

Private credit

• Patrick Ceresna · Big Picture Trading

  Private credit is deteriorating, with the BDC ETF BIZD breaking to fresh lows.

  Private equity credit was a major worry in Q1 and into Q2, but the market has since stopped discussing it. Over the last two weeks the BDC-linked ETF BIZD has broken to fresh new lows. Ceresna reads this as continued deterioration in the private credit segment. The first shock hit high-quality Treasuries, and the stress has now moved into riskier parts of the bond market, where the consequences of an accident are larger.

  “when looking at an ETF like the BIZD, we have now just seen it break to fresh new lows. So we continue to see actually a deterioration in this part of the credit markets.”at 1:25:29

US dollar

• Patrick Ceresna · Big Picture Trading

  Dollar strength can keep going because euro weakness leaves room for USD gains, perhaps toward 103.

  Traders were positioned aggressively short the euro, pound and Canadian dollar against the dollar, at zero percentile of their look-back. The dollar's short-term high in October allowed the pound and Canadian dollar to retrace about 50% of their selloffs. The euro has barely bounced, though, and it is the largest component of the dollar index basket. If the euro has broken down and cannot rally even when the other pairs bounce, Ceresna sees more downside for it and an open window for the dollar to climb further. He suggests the index could reach 103, though he hedges it with 'maybe'.

  “And if it is, the window remains open for the US dollar to continue higher. Maybe we're gonna see one zero three on the upside as we go.”at 1:27:29

Gold & precious metals

• Patrick Ceresna · Big Picture Trading

  Gold and silver are in a distribution cycle, with gold near 4,000 and silver at 2026 lows.

  Gold is trading around its summer lows, a stone's throw from 4,000, and silver is at its 2026 lows and trying to break lower. Ceresna says the current macro backdrop, with tight liquidity and dollar and interest-rate headwinds, does not favour gold and silver, so they remain in a distribution cycle. The selling pressure continues, and prices are highly vulnerable to a further breakdown. If 4,000 breaks, the next support is at 3,600 to 3,800, which he sees as a tactical buy zone. He expects a durable bull market to need a different macro regime.

  “in a period where liquidity is tight, when there's dollar and interest rate headwinds, gold and silver remain in a distribution cycle.”at 1:31:27

Nuclear energy

• Patrick Ceresna · Big Picture Trading

  Uranium stocks hit 52-week lows on AI-basket selling, even though physical uranium is stable.

  Physical uranium prices remain very stable, with no real distribution and only minor spot selling at a discount to NAV. Uranium equities, however, have been grouped with many AI trades. As the broader AI baskets sell off, the pressure is spilling into uranium stocks, which are breaking to 52-week lows on short-term liquidity. Ceresna says the long-term nuclear story is still strong. In the short term, though, he expects further distribution until the AI stocks find a durable bottom, and he does not yet see where the next buying opportunity is.

  “uranium stocks have been basketed with many AI trades. And so as the broader AI baskets are selling, we are seeing that pressure likely leading to some distribution in these uranium stocks as well.”at 1:33:02

Copper & industrial metals

• Patrick Ceresna · Big Picture Trading

  Crowded copper longs are breaking down; losing the $6.40 support could trigger a washout.

  The structural copper bull case rests on electrification, grids, data centres and long-term supply constraints. Positioning reached the 100th percentile for six months, and a month ago net positioning hit a 10-year high. Since then positioning has been fading, and copper has failed to break out over the last three or four months. It is now at a one-month low, near key support since July. A decisive break of that line would reverse the trend, and the crowded positioning could force a sharp liquidity washout. Ceresna explicitly does not guarantee that outcome.

  “And now we find ourselves in a situation where copper is breaking down. We're now at a one month low and approaching a key support line that's been the low since July.”at 1:36:41