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

0:37 The setup — $100 oil and a 10-year near 5%

• September 10: WTI and Brent both above $100; S&P and NASDAQ −0.5%, gold −1.5%, Bitcoin −2%; the 10-year at 4.92%, the highest since 2023.

1:29 The $5,000 midterm pledge — "a classic sign of severe desperation"

• Trump's pledge of $5,000 to every adult if Republicans keep both chambers (~$1T, on top of a ~$1.8T deficit). A lifelong down-ticket Republican, McGlone says he might vote Democratic for the first time: "you don't pay people to vote for your party."
• Voters care about the next electricity, healthcare, heating-oil and diesel bill; things are "much worse now for your average person" — he expects "a major potential sweep against Republicans" (3:22).

4:08 A contentious midterm in volatility season

• The last two midterm years (2018, 2022) were down for S&P 500 total return. Fed funds futures price ~60 bp of hikes one year out — the most since 2021 Q4; gold bottomed the year after that, cheap, and "now it's the opposite."
• His "stock puppets" list: copper first, then Bitcoin, gold and all the metals — the Bloomberg All Metals index has its highest 100-day correlation with the S&P in its 30-year history (4:57).

5:21 What he got wrong — Iran's staying power, and a too-wet corn belt

• He did not expect Iran to retain significant offensive capability; crude is now "deer in the headlights" — if it goes much higher, "it breaks stuff," as diesel already shows.
• A former farmer from the corn belt: he has "never seen a July with too much rain" pressuring corn yields — corn, soybeans and wheat all caught in "really unusual events" (6:04).

6:19 Grains are crude-oil sock puppets

• Corn yields: expected at a record ~186 bu, now below 180 — from rain, not drought. Wheat up on early drought and Russia/Ukraine exports; soybeans up on soybean oil.
• Crude and soybean oil are both up ~75% on the year; Brazilian supply will kick in. "This whole space is a bit of a sock puppet to the crude oil. If crude oil drops, then the whole space and grains will drop too" (7:15).

9:06 Gold is a stock puppet

• FedWatch puts a hike next week at 67–68% (8:40). Gold's 100-day correlation with the S&P is ~0.52, a multi-decade high (normally zero to negative); its volatility is 2× the S&P's (highest in 20 years) and the highest versus a Treasury index in 40 years.
• Fed tightening is "not a good environment for gold": an enduring 3,000–5,000 range, "could easily get back down to 3,000" first (9:44).

10:12 Central banks hiking into a temporary oil pump

• The ECB hiked today and central banks are tightening everywhere except deflationary China. The Fed is ~2/3 priced for a September 16 hike, "which I don't think is going to happen — if stock market goes down they won't hike."
• The crude pump is "the decision of one man" who leads the world's largest energy producer and net exporter: "at some point this is going to revert lower, and crude oil collapse" — though Trump already concedes it may not happen by the midterms (10:43).

11:03 Sell when they're yelling — a gold no man's land

• "Gold is tilted over to a bear market on the back of what Bitcoin did last year" — the same euphoria that marked Bitcoin's top. The open question is whether it presses 5,000 or breaks below 3,000 and "make[s] it easier to reset long."
• Inflation fear vs higher rates: against a Treasury-guaranteed ~5% 10-year, the income-less rock's value is "just plain horrible" — at a 40-year high versus Treasuries, "thank you but no thank you" (12:25).

13:33 When gold was a buy — the 60-month average

• Q4 2022: gold near 1,600 sat on its 60-month moving average during the tightening cycle — "it was cheap. It was the time to buy it." Now it is 60% above that average, the highest year-end reading since ~1980 and similar to the 2011 peak.
• Silver, platinum and iron ore have already "pumped then dumped this year"; gold is up only ~1% (14:12).

14:28 Copper — an accident waiting to happen

• Down 5% today. Everybody knows the AI/electrification/decarbonization story; inside the market, tariffs made CME the center of the copper universe — ~70% of the major exchanges' inventories (~700,000 t) now sit in LME or CME-type warehouses, the highest ever.
• Managed money has run 20–30% of open interest net long since copper broke above $5; it trades at 2–3× the S&P's volatility yet underperformed for years — "it just needs a little trigger" (15:39).
• HG1's 100-day correlation with the S&P is ~0.62, the highest in the contract's history since 1988: "correlations go to one in down markets. When they go to one in up markets I take it as a warning" (16:08).

16:38 Oil will come down sharply — natural gas is already leading

• "It's not an if." Diesel at ~$6 is "the grease of the global economy" and is breaking things in the US, Europe and Asia.
• US natural gas, January contract, $3.80/MMBtu — lowest since end-2021; the measure of heat, electricity and fertilizer "led the way down after 2022" and is doing it again, despite hedge-fund shorts and a glaring gap to heating oil (16:56).

17:47 The Western Hemisphere is the price maker

• Since Russia invaded Ukraine the hemisphere has become the energy price maker: record production in the US, Argentina, Brazil and Guyana, near-record in Canada; Venezuela "on the way" — up 30% YoY and expected to double in a year.
• US + Canada run an ~8M b/d crude and liquid-fuels surplus, flat a few years ago. "I think 100 in the US is a decent peak" — he had thought 120 early in the year (18:38).

18:56 The stock market hasn't broken — yet

• Over 20 years, crude's moves have coincided with the stock market going down, as have unleaded gasoline's round-trips from ~$4.20 back to $2. If stocks don't break, the Fed may have to act; if they do, "the whole thing starts trickling down for a normal reversion of very elevated risk assets."

20:04 Copper and the S&P — the same chart

• Copper usually trades with the S&P and sometimes leads, but has lagged since 2023. Take three zeros off the S&P and overlay copper (~$6.50/lb, high this week ~$6.85): "it's been the same trade."
• Price ÷ 200-week moving average: both copper and the S&P sit "near the danger zone, around 40% premiums" — his piece for tomorrow. This morning copper broke first, then stocks fell (21:05).

21:47 Gold vs the S&P over 100 years — agitating with facts

• His chart of gold ÷ S&P 500 total return trends down over a century, but gold has outperformed for almost 30 years — "the longest period in history." Meanwhile the Buffett model (S&P vs GDP) is at its highest year-end since 1928: "something's going to give" (22:51).
• The S&P has survivor bias and tracks ingenuity in a well-run society — "that will always win." Always hold some gold, but after a 30-year run "it's time to tilt away" — and not into equities either (23:15).

23:49 T-bonds at 5.34% — and market cap vs total debt

• "This is where I tilt over to T-bonds at right now 5.34%" — he calls that "the next big trade," while admitting he has been wrong on it for a while (as he was on gold breaking 2,000 until 2024).
• His new gauge: US stock market cap (~$82T) vs total debt (~$40T) = 2.1×. Debt is a liability that bulls cite for gold, "but you can't point out a liability without pointing out the asset." Gold, stocks, housing and farmland are all expensive (24:14).

25:02 The rebuttal — why start in 1927?

• Lin: gold was pegged before 1973. McGlone: 1927 is as far back as the S&P comparison goes on the terminal; against the Dow back to ~1890, gold is still down ~40% — though the Dow is a much narrower index.

26:12 What oil level breaks stuff? "I think we're there"

• Diesel is at an all-time high. In 2008, $4 gasoline in July was his trigger to go short and long bonds. Gasoline normally rises into driving season and falls after, so rising now "is a real bad sign."
• The template: gasoline spiked to $4 and ended the year at $2; crude hit $147 and ended near $40. "I see a scenario like that" — "that 5% bond, treasuries is a place to be" (27:15).

27:34 Grains, diesel — and Bitcoin as the leading indicator

• Soybean oil is up almost exactly as much as crude — both oil and biofuels; food moves on diesel, so he overlays the grains on diesel's record price.
• Bitcoin, one of his best leading indicators for everything over the last decade, just hit resistance and is "heading back downward"; below 80 it may be "what led everything up is leading everything back down" (28:11).

28:31 The deflation thesis — "delayed, extended, and more extreme"

• Like 2008: a war-driven energy spike creates short-term inflation; the ECB hiked in 2008 and 2011, then cut hard when stocks fell. Energy is the number-one short-term source of inflation or deflation, and the US has a super-abundance of it.
• The trigger is the stock market going down — which makes TLT "essentially a put on the S&P 500 with positive carry, no time decay" (29:29).
• His early-year signal: gold volatility surging versus the S&P, as in 2006–07, while S&P volatility is near the lowest year-end levels ever (1980, 2006, 2007). At 2.5× GDP, a 10% correction is 25% of the economy (29:47).

31:02 Not more bullish on stocks — "we reached an endgame"

• If oil drops 20–30% on a Gulf resolution, stocks (and bonds) rally in relief — but "we're in a pretty severe historic silly stage." Well-invested older friends say "I can't sell because of the taxes."
• The Fed has to tighten because inflation now comes mostly from wealth creation, not just oil; pressuring the Fed to cut to win an election now backfires, since affordability is the issue. "Midterms can be a good trigger" (31:42).

32:19 The endgame he didn't foresee

• He expected the invasion but also a quick suppression of Iran's offensive capabilities — more than six months in, it hasn't happened. As in 2008, crude went higher than he thought: "the higher plateau drops harder" (32:40).