Oil To 'Break' Everything; Stocks, Bitcoin, Gold Crashing 'Back Down' | Mike McGlone

Mike McGlone (0:00)

We've reached an end game. This might all pan out by the end of the year, and midterms can be a good trigger. My look at Crude Oil now is a bit in the headlights. Is this gonna go much higher? If it does, it breaks stuff. Gold, it fits in my stock puppet category. It's highly correlated. The 100-day correlation with the S&P 500 reached almost such a multi-decade high recently. Its volatility versus the S&P 500 is two times. It's the highest in 20 years. It could easily get back down to 3,000 before at some point it stays above 5,000. And if you look at copper over the last three, four years, it trades at two to three times the volatility S&P 500, and it's underperformed. Now, this year's performed. That's an accident waiting to happen.

David Lin (0:38)

Mike McGlone joins us today. It's September 10th, and WTI, both WTI and Brent Crude are above $100. Now it's about a bit of a down day for the stock markets. The S&P is down 50 basis points. The Nasdaq is down about 50 basis points. Gold's down 1.5%.

Bitcoin's down 2%. Ten year yields, well, the yields are up. Ten year and 30 year. The ten year is now at the highest since 2023, 4.92% inching towards the critical 5% that a lot of people on my show have been warning about. Mike, welcome back to the show. Good to see you again.

Mike McGlone (1:11)

David, it's always good to be back. I'm honored. I do enjoy your interviews and your questions. You help me look and sound like I know more than I do when I listen to a lot of your stuff. So thank you for that.

David Lin (1:22)

That is very kind words. High praise coming from you.

Honored to have you back. Let's talk about what's going on right now in the markets. Before we get to the prices and the numbers themselves, take a look at this story here. Trump hoping to salvage midterms makes a claim to, he wants to pledge, he's pledged to give every American adult $5,000 if Republicans retain control of the House and the Senate in the midterm elections.

This promise would, dubious promise according to the AP, would most likely cost $1 trillion, require congressional approval, and would further exacerbate the country's nearly $1.8 trillion annual deficit. Well, first of all, on the prediction markets, which I can show you in just a bit, it's not likely that the Republicans will take both the House and the Senate. So, that aside, election odds aside, what's he trying to do here? That's a rhetorical question. I think you and I both know what he's trying to do. But I just want to get your response.

Mike McGlone (2:33)

Well, my first, I'm a very neutral, conservative Republican, and endowed to, I always just vote Republican down the ticket. The first time in my life, I might vote Democratic down the ticket. Just to push back on, we need democracy in this country. Don't pay people to vote for your party. Just, this is anathema, but it's a classic sign of severe desperation. And when he said, and he's been repeating, repeatedly pointed out, he doesn't care about the midterms, that usually means he does. It's also a sign of how things are going really bad with the war. And I think he might be, typically it happens sometimes when you get in that box, and with a human like him, he's completely ignoring the pushback he's getting now from the average person in this country, globally. But most voters, based on what's happening since he's become president, and most people don't care about nuclear weapons, and Iran, they care about people like me who've raised a lot of children and paid a lot of bills in their life, about that next electricity bill and healthcare bill, and heating oil and diesel and insurance and supporting your family. And things are much worse now for your average person than they were two years ago before he was elected.

So this is going to be a major potential sweep against Republicans. This gimmick is a sign of desperation. My first thought is, oh, gold's gonna like that and gold hates it. So I think most people think, yeah, the sooner we get rid of him, the better. And I think most Republicans are thinking in that they can't say that, but the voters I think will. And what does it mean for markets? Bottom line, that's always what it means for markets. For me, as neutral as possible.

And my thought is this is going to be a very contentious midterm election year. Last two midterm election years, markets were down 2018, 2022, and S&P 500 total return. It is volatility season. Fed funds are priced for hikes. One year out, they're priced for 60 basis points of hikes. That's the most on a one year future since 2021 Q4.