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Mike McGlone: The Generational Financial Reset is Here and the Fed Can’t Help

Tom welcomes a new guest to the show, Mike McGlone, Senior Commodity Strategist for Bloomberg Intelligence.

Mike discusses the key indicators signaling an upcoming recession such as tight liquidity which points to a hard landing. The stock market is also at an all-time high relative to GDP since 1936, a sign of a possible recession. Additionally, Europe is in recession, and China is facing declining growth. This recession is a result of a combination of human nature and external factors, such as the autocratic leadership in China and the overbuilding crisis. Mike cautions against speculation surrounding potential escalations with Taiwan or Russia, but notes that the leadership in China may look to place blame for the country’s woes outside itself.

Mike also discusses the tensions in the South China Sea and the role of the US dollar and US power. He believes that the dollar is seen as a reliable partner in the international community due to its security and willingness to do business. In contrast, the Russian and Chinese models do not involve the US dollar, which could lead to a global economic reset. The push for electric vehicles onto Europe by China is seen as a deflationary force due to the advancement of technology.

Mike is optimistic about the strength of the US dollar and resists the idea of a global depression, instead stating that deflationary forces are kicking in. He expects the Fed to not hike rates in November and cautions that the market may be overvalued given the current economic situation. Ultimately, he advises investors to focus on the returns offered from US Treasuries and limit exposure to high-risk assets.

In terms of commodities, Mike discusses the surge in US surplus of liquid fuel and crude oil, making OPEC less significant. Gold is the best performing industrial metal and is expected to perform well during the recession. Mike expects the stock market to drop significantly with both the S&P and gold meeting at 3000.

He cautions traders to define their risk, protect their stops, and accept when they’re wrong, in order to be successful. In conclusion, Mike emphasizes the importance of objective analysis and avoiding confirmation bias in trading and investing. He also mentions his commitment to helping Miami Dade College students understand trading.

Time Stamp References:
0:00 – Introduction
0:56 – Markets & Soft Landings
4:43 – China & Demand
10:35 – Eastern Concerns
13:21 – ECB & Europe Concerns
15:35 – Winter & Energy
17:58 – US Dollar Strength
20:30 – PPI & Fed Hikes?
25:40 – Cyclical Inflation?
29:09 – Big Reset Ahead?
32:50 – Dr. Copper & Oil Demand
36:09 – Gold & Currencies
38:39 – S&P To Gold Ratio
40:16 – Wrongs & Rights
44:45 – Thinking Clearly & Exits
46:20 – Crypto & Bitcoin
51:00 – Wrap Up

Talking Points From This Episode

  • The precautions and strategies needed for investment decisions during a recession.
  • Tight liquidity has pushed markets to a recession with most indicators signalling a severe downturn coming.
  • Bitcoin is serving as a reliable leading indicator due to its 24/7 global liquidity.

Guest Links:

Mike McGlone is Senior Macro Strategist for Bloomberg Intelligence, a unique research platform that provides context on industries, companies, and government policy, available on the Bloomberg Professional service at BI(GO). Mr. McGlone specializes in the broad investible commodity markets. Mr. McGlone joined Bloomberg in 2016 with over 25years of futures and commodity trading and investing experience, beginning at the Chicago Board of Trade. Prior to joining Bloomberg, he was a head of US research at ETF Securities. Prior to ETF Securities, Mr. McGlone headed the commodity business at S&P Indices. His previous roles included head of futures research at ABN Amro and VP research, analyst, trader, sales at Aubrey G. Lanston / IBJ Futures.

Mr. McGlone has an MBA from DePaul University in Chicago and bachelor’s of science and arts degrees from Illinois State University. He is a CFA Charter holder and has earned a Financial Risk Manager designation.

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