A Massive Sell-Off Is Starting… And Most Investors Don’t See It w/ Steven Van Metre
Speakers
Summary
- Speaker Steven Van Metre is bearish on equities, citing triggered systematic selling from CTA (Commodity Trading Advisor) strategies at major banks like Goldman Sachs and Bank of America, which will sell into strength over the next week to reduce long exposure.
- Identifies volatility control strategies (common in variable annuities) as the next potential domino; these would begin selling if the VIX sustains levels around 30, representing a larger pool of capital than CTAs.
- Sees the spike in oil prices due to the Strait of Hormuz situation as a critical tipping point, historically preceding recessions/corrections, as it squeezes consumers who are already at a breaking point, leading to cuts in discretionary spending.
- Argues the labor market is weakening, evidenced not by job losses yet, but by flat or declining average weekly hours for production workers, which prevents consumers from absorbing higher energy costs.
- Expects a short-term inflationary bump from oil but believes it will not be persistent due to the weak consumer, leading to disinflation and potential pockets of deflation, especially if overstocked inventory must be cleared.
- Notes gold's price action is concerning as it is not rallying with increased volatility, suggesting potential forced selling by individuals needing liquidity (e.g., from early 401k withdrawals) rather than central bank activity.
- His "Portfolio Shield" strategy is currently hedged with long-term treasuries (TLT), believing large commercial banks are providing a floor as they prefer buying safety over lending into a weakening credit cycle.
- Is bearish on the AI investment theme, citing corporate insiders selling, companies like Oracle burning cash (negative free cash flow) with no clear ROI timeline, and the risk that share buybacks—a major market support—will be cut.
- Highlights private credit space "blowing up" as a significant, interconnected risk to high-yield bonds and the broader credit cycle.
Trade Ideas
Speaker notes gold is not rallying despite rising volatility, which is unusual. Suggests someone is selling, potentially due to a need for liquidity, citing record early 401k withdrawals as an example of financial stress. In past crises, individuals forced to raise cash (to pay bills, avoid selling tax-advantaged accounts) may sell liquid assets like gold. Current economic stress could be triggering similar forced selling, capping price upside. Near-term price action suggests headwinds from distressed selling, making it an unattractive hedge despite long-term bullish narratives. The selling pressure is temporary or from a single source (e.g., one central bank), and gold resumes its rally as a safe haven.
Speaker adjusted his portfolio hedge from short-term to long-term treasuries (e.g., TLT). Believes large commercial banks are "massive buyers" providing a floor, as they prefer safety over lending into a breaking credit cycle. A weakening economy and credit cycle (e.g., private credit stress) will lead to disinflation after a short-term oil-driven inflation scare. Banks will allocate to safe government bonds, and the monetary system will require lower rates to function if credit contracts. Long-term treasuries are a hedge against the equity downturn he foresees, with limited perceived downside due to institutional buying support. Persistent inflation forces the Fed to hike or hold rates higher for longer, and bank buying support falters.
Speaker cites Oracle as a "perfect example" of a formerly profitable company that will have "negative free cash flow for the second year" due to heavy AI-related capex (data centers, chips) with no clear timeline for return on investment (ROI). High AI spending is turning cash-generating machines into cash-burning operations. If ROI remains elusive, Wall Street sentiment will sour, and companies may be forced to cut shareholder returns (like buybacks) to fund investments. The AI capex cycle is eroding financial strength in leading tech companies without a visible payoff, creating fundamental downside risk. AI productivity gains and monetization accelerate faster than expected, justifying the spend and restoring positive cash flow.
Up Next
This Milk Road Macro video, published March 17, 2026, features Steven Van Metre discussing GOLD, TLT, ORCL. 3 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Steven Van Metre · Tickers: GOLD, TLT, ORCL