Tightening liquidity, lower resource prices and a risk-off environment — AIA Weekly 6.27.26

Liquidity & sentiment — the short-term market drivers 00:26

• "In the short term, what drives markets is liquidity and sentiment" — fundamentals play out over the long term, but short-term moves are liquidity-driven and then exaggerated by sentiment (that's where the volatility comes from).

The Cantillon effect — the COVID liquidity flood and its downstream inflation 01:21

• Central banks flooded the world with liquidity out of COVID, producing the asset-price boom and then inflation. The Cantillon effect: those closest to the money printer benefit first as asset prices rise; those without assets get only the higher prices later.

CFR Global Monetary Policy Tracker — easing has flipped to tightening 02:18

• The Council on Foreign Relations tracker (May 2026) indexes easing/tightening across ~54–55 central banks: positive = tightening. The reading has moved from general easing to general tightening — "liquidity is in fact tightening."

Tightening liquidity is hitting risk assets — gold, Bitcoin, commodities 03:32

• Risk assets, commodities, gold and Bitcoin all respond to liquidity in the short term and are now feeling the tightening — liquidity drives the initial move, sentiment exaggerates it.

Bitcoin as a liquidity barometer 04:26

• Bitcoin "correlates very well with changes in liquidity." Its run to new highs coincided with global easing; the peak/rollover lines up with the phase shift to less liquidity and higher rates — a good barometer that's now signaling contraction.

A stronger dollar adds to the pressure on gold and commodities 05:37

• As liquidity shrinks, the dollar gets more valuable (and rising US rates draw in foreign capital). Since gold and commodities are priced in dollars, "a lot of things [are] conspiring against" them short-term — they ran up and are now consolidating. "It doesn't change my long-term view."

"All roads lead to money printing" — the Fed as an engine of inflation 06:55

• Whoever runs the Fed — "resurrect Volcker… Mickey Mouse, Bugs Bunny" — will print in a crisis; the institution is "an engine of inflation." The Taylor rule implies a ~6% funds rate, but that would create a "deflationary depression because of all the debt," so they won't hold the line.

The gold chart: a 3,300→5,600 run now consolidating — not yet a buy 08:09

• Gold (like copper and uranium before it) ran, sucked in FOMO, and is now pulling back as liquidity contracts and sentiment turns. "This is not a chart that I would want to buy" — 50-day about to cross below the 200-day, new lows. Wait for a bottom and a turn; "gold will sniff out the next… money printing."

CRB and oil — round-tripping; probabilities, not predictions 10:45

• The CRB launched when the war started and is now pulling back (mostly energy). On oil's spike: "I don't make predictions about commodities… you look at the probabilities." The $200 case was a possibility tied to Iran attacking facilities; they didn't, so it deescalated. Futures are at record short — "everybody's short… oil's going back to 50. Well, maybe."

"A strategic defeat for the United States" — the ceasefire is already broken 13:05

• "My view is that we're never going back to the way things were." The US attacked Iran "yesterday" after the Iranians droned a Singapore ship's bridge — "there's your ceasefire." Iran likely comes out better than it started; the question is whether the market is wrongly "pricing in everything back to normal."

Hormuz won't fully renormalize — base case is no return to Feb 28 14:55

• Iran and Oman issued a joint communique claiming control of Strait access; the "toll arrangement" is unresolved. Base case (no price attached): "we don't go back to the way it was on February 28th." The US could not militarily open Hormuz or force inspections — so trade realigns and Gulf producers build bypass pipelines, which eventually prices into oil.

Still bullish oil-field services; asymmetric drone warfare 18:26

• "I'm still bullish on oil field services" — buyers will diversify reserves/production away from an unreliable Middle East. The Navy couldn't keep a sea lane open because of drone/missile "asymmetric warfare" (the same dynamic bogging Russia down in Ukraine); a drone swarm now sinks ships, so the Gulf emptied of warships.

A 40-year disinflation ends — the new era of inflation 20:51

• The very-long 10-year Treasury chart: the late-70s Volcker spike gave way to ~40 years of disinflation and booming equities; now a "phase change." The new inflation era began with COVID and continues on fiscal deterioration — "the debts are going to start overwhelming them," and "all roads lead to money printing" because no western constituency cuts spending.

Deficits, the 30-year bond, and a dollar down 53% in 30 years 23:46

• Would you hold a 30-year Treasury (now ~5%) for 30 years? "Not much" left at maturity. Deficits of 1.5–$2T (6–7%) in a "good" economy keep upward pressure on rates. The dollar's purchasing power is down 53% from 1995–2025 — and "that's going to continue," so gold ultimately moves higher even as it's in a short/medium-term down cycle now.

Kopernik / Dave Iben on dollar debasement 27:18

• Quotes Dave Iben (Kopernik Global Investors), "a big fan": "the next 30 years will be much worse given the comfort level the government has with perpetual $2 trillion deficits… over the past century, the dollar has lost over 99.5% of its value relative to gold." Cites Alexander Fraser Tytler — democracies last "until the voters discover that they can vote themselves largesse from the public treasury."

Trade the whole world; hunt bombed-out value, don't chase Micron 30:56

• Even with US stocks overvalued, "there's still value" — brokerage access now spans the globe, so seek bombed-out / turning-around industries anywhere rather than being "wedded to one country." "It's not hard to just go buy Micron because it's going up… [but] you're not going to be able to make a successful investing career" chasing shiny objects.

Greenspan dies at 100 — and the 1987 money-printing playbook 32:06

• Alan Greenspan died this week at 100 (Fed chair ~two months before the '87 crash). On Black Monday (Oct 19, 1987, Dow −23%) his response — "let it rip," print money to bail out the market — worked but "no one considered the long-term repercussions." "Dislocation… panic… print money" became the playbook (under cover of "the dot plot" and Congressional theater).

Greenspan's 1966 "Gold and Economic Freedom" essay 39:43

• Before he was "the maestro," Greenspan wrote (1966, via Barry Ritholtz's site): "Deficit spending is simply a scheme for the hidden confiscation of wealth. Gold stands in the way of this insidious process… it stands as a protector of property rights." His values "totally changed once he got that position" — why Polomny doesn't fear short/medium-term metals declines.

Retail piling into semis = the bag holders 45:24

• Bloomberg: monthly inflows into US semiconductor ETFs hit a new high — "of course they did, because they only go up… until they don't. The shoe clerks and bleacher bums are always the bag holders."

SpaceX lockups — retail becomes the "exit liquidity" 46:17

• Living near Boca Chica, he's read about "millionaires made… on paper" — "wait till the lockups come." VCs/insiders bought in low; the IPO is "exit liquidity, the bag holder, the retail," with forced index buying skewed to push it into 401ks. Starlink is "a step behind 5G on Earth"; the Mars / "data centers in space" S-1 pitch is "dumb" — Musk "overpromises and underdelivers."

Uranium — the long-term uptrend you'd want to buy 50:23

• Unlike the gold/copper charts that are "going down now," uranium's long-term price chart is a clean uptrend — "this is a chart you would want to buy… it will continue." (Forced passive-flow buying "isn't the first time and it won't be the last.")

Oil demand intact — a $70–90 range is the sweet spot for services 51:15

• The drop is "the reaction to the high oil prices," not demand destruction — 2026 US gasoline demand is above last year. Transportation is only a small slice of a barrel (petrochemicals dominate). His view: oil swings violently but settles "anywhere between 70 and $90," the "sweet spot" for offshore services.

Biotech/healthcare bottoming — a starter ARKG position and "getting my beak wet" 52:57

• Biotech/healthcare, in an ~11-year downtrend vs QQQ and "out of favor," looks to be bottoming. His process: "I start listening to a few podcasts… I take a small position somewhere just to get my beak wet, and then I start doing more investigation." He bought a starter ARKG (momentum, breaking out) and ties the theme to the "silver tsunami" — an aging population (the AIA portfolio already holds a related winner).

Wrap: an educational episode — patience will be rewarded 57:21

• "It was more of an educational situation": the short-term resource-sector pain is mostly an overbought unwind plus higher-rate sentiment. "Patience should be rewarded… at some point we'll touch a bottom because all roads lead to inflation."