50% Crash, 0% Inflation Next; ‘Endgame’ Has Begun Warns Analyst | Mike McGlone
Speakers
Mike McGlone
— Senior Commodity Strategist, Bloomberg Intelligence
Summary
Mike McGlone, Senior Commodity Strategist at Bloomberg Intelligence, argues that a deflationary bust is imminent, with the 'pump-then-dump' pattern spreading from cryptos and metals to the US stock market. He expects the S&P 500 to suffer a major decline, potentially 50%, triggering a recession and driving CPI near zero. He recommends shorting Bitcoin, silver, copper, crude oil, corn, and Dogecoin, while favoring long US Treasury bonds at 5% yields and considering gold at $4,000 as a dip buy.
- Cryptocurrencies have turned into 'duds,' with Bitcoin leading a deep purge and presenting a clear sell signal.
- Precious metals experienced a speculative pump-and-dump, and volatility in gold and silver is warning of a broader reversal.
- Copper, crude oil, and agricultural commodities are highly dependent on a rising stock market and face sharp declines when equities roll over.
- The S&P 500 is at extreme valuation (2.5x GDP), reminiscent of 1929 and 1989 Japan, and a 20–50% drawdown is overdue.
- Long US Treasury bonds yielding 5% offer a safe-haven and capital appreciation as deflation takes hold.
- Gold at $4,000 may present an early buying chance after its correction, though the speaker remains cautious.
- The Fed's premature rate cuts and the administration's stock-market pump attempts are setting up a lose-lose endgame of recession and political backlash.
Ideas
S&P 500 due for severe decline.
The US stock market is the last remaining 'stud' after cryptocurrencies and metals turned into 'duds'. It is extremely overvalued at 2.5 times GDP, a level only seen in 1929 and 1989 Japan. The pump-then-dump pattern that started in Bitcoin will spread to stocks, causing a severe decline (potentially 50%), a recession, and deflation.
Bitcoin dud, sell into decline.
Bitcoin has become a 'dud' after speculative excess, with unlimited supply of alternatives and an ongoing purge in the crypto space. He expects further decline, with next support at $50,000 and a potential drop to $10,000. Traders should sell the duds.
Silver speculative dump; short it.
Silver experienced a classic pump-and-dump, with 180-day volatility versus the S&P 500 at its highest since 1980—a clear sell signal. He placed a prudent short around $100 and lowered the target to $85, expecting further declines as the stock market corrects.
Crude oil set for sharp decline.
WTI crude oil is near the upper end of a 20-year trading range. High prices are curbing demand, China is selling its strategic reserves, and North American supply is surging. A normal reversion is likely, with prices headed back toward $40-$50.
Copper to drop with stocks, short.
Copper's performance has badly lagged the stock market, and the metal is almost completely dependent on rising equities. If stocks drop, copper will likely fall two to three times faster. He put a prudent short around $6 per pound and warns it is a weakening metal.
Buy long bond at 5% yield.
With deflation looming and the stock market likely to fall, the 5% yield on the US long bond is exceptionally attractive. Yields will decline as the economy weakens, providing substantial capital gains. It represents a 'last chance' to lock in high income with low risk.
Dogecoin joke, short to zero.
Dogecoin is a joke with no underlying value and still worth $13 billion. It will be wiped out as the crypto purge progresses and tokenization of real assets takes over. Investors should look to short speculative coins like Dogecoin.
Corn above five, short position.
Corn prices above $5 are vulnerable because so much depends on the stock market and broad commodity strength. With a normal growing season and the endgame deflation theme, a short position there appears prudent.
Gold dip buy at 4,000.
Gold has pulled back to $4,000, which is significant support. After a massive pump-and-dump, this level could offer an initial dip-buying opportunity, though he hasn't turned fully bullish yet.
