Mike McGlone, a seasoned commodity strategist at Bloomberg Intelligence, shares his insights on current market dynamics and emerging risks. He discusses the significant downturn in commodities and warns of a looming correction in the U.S. stock market, drawing parallels to historical bubbles. McGlone predicts gold prices could soar to $4,000 per ounce, supported by increased ETF holdings and central bank buying. The conversation also delves into the impact of tariffs on industrial metals and the evolving landscape of global trade.
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insights INSIGHT
Broad Commodities Are Rolling Over
Commodities peaked in 2022 and are now rolling over, with crude and grains down sharply year-to-date.
Mike McGlone says deflation follows inflation as inflated assets revert lower.
insights INSIGHT
China Bond Yields Signal Deflation
China’s 10-year yield is about 1.71% versus the US 10-year near 4.2%, signaling severe deflationary pressures.
McGlone: 'Ignore what they say, watch what they do.'
insights INSIGHT
US Stocks At Historic Extremes
McGlone warns the US stock market is extremely overvalued and comparable to 1929 and 1989 peaks.
He calls current equities mania and expects a mean reversion risk.
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In this podcast interview, Mike McLean, a senior commodity strategist for Bloomberg Intelligence, offers a nuanced perspective on current economic trends, focusing on potential deflationary forces and market corrections. McLean argues that commodities are experiencing a significant downturn, with crude oil down 9% and grains down 16% for the year, primarily due to their previous inflationary peaks in 2022. McLean anticipates a potential market correction, particularly in the U.S. stock market, which he believes is overvalued and approaching a critical point of reversion. He highlights historical parallels with market peaks in 1929 and 1989, suggesting that the current market conditions share similar characteristics of excessive valuation and speculative sentiment. Gold and U.S. Treasury bonds are McLean's preferred assets for the remainder of the year. He notes that gold ETF holdings are up 10% this year, after four consecutive years of decline, and predicts gold could reach $4,000 per ounce. Central bank buying and a potential stock market pullback could further drive gold's performance. The interview also explores the potential impact of tariffs, particularly on industrial metals like copper, and the changing dynamics of global trade. McLean argues that the U.S. is reshaping international trade relationships, which could pressure corporate profits and contribute to market volatility. Regarding cryptocurrencies, McLean is cautious, viewing them as highly correlated with the stock market and potentially vulnerable to a correction. He suggests that the proliferation of stablecoins represents a more practical application of blockchain technology for financial transactions. McLean's overall thesis centers on the cyclical nature of markets, emphasizing that periods of inflation are typically followed by deflationary corrections. He warns investors to be wary of consensus thinking and to pay attention to historical patterns and market signals that suggest a potential downturn. The interview concludes with a reminder that market psychology and sentiment are crucial indicators of potential market movements, and that extreme optimism often precedes significant corrections.
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