Trade of The Week - MacroVoices #530

Summary

This episode discusses the trade of the week: a paired short European financials vs long US financials to capture divergence from building macro stress. Erik Townsend provides updates on his S&P hedge, long crude oil position, and reduction in gold, all driven by expectations that the Strait of Hormuz closure will cause a severe oil crisis and market selloff similar to COVID. The hosts also analyze the implications for the dollar, oil market structure, and uranium.

• Patrick Ceresna presents a pair trade: short EUFN vs long XLF to fade European financial outperformance.
• Erik Townsend doubled down on his S&P 500 hedge, expecting a market selloff from oil crisis denial.
• Erik remains long WTI crude oil futures, bought at $79, with further upside expected.
• Erik sold more than half his gold position, anticipating downside as rising oil pressures the Fed.
• The UAE leaving OPEC signals a loss of spare capacity, supporting higher oil prices in the near term.
• Erik sees a potential gap-fill rally in the US dollar before the secular downtrend resumes.
• Uranium is viewed as long-term bullish but vulnerable to a broad selloff in the near term.
• The hosts emphasize that market denial may persist for weeks before the macro reality hits equities.