Full transcript
0:00What's up, folks? I hope you're all
0:01having another blessed weekend. Today is
0:03a Saturday, so that means it's weekend
0:05banger time. And
0:09do I smell desperation in the air?
0:12Because that's exactly what's going on.
0:15And what do I mean by desperation? Well,
0:17take a look at this. JP Morgan came out
0:20and basically threw their hands in the
0:22air and said, "We don't know what the
0:23heck is going on anymore. We don't know
0:25what's going on because we don't have a
0:27baseline view because all of our
0:29economic red lines have been blown past.
0:31We thought that there would be some kind
0:34of agreement to reopen the straight by
0:37June and that has not happened. They're
0:39sec they're just shooting they're
0:41killing a revenue stream, right? Because
0:42they sell analysis to their clients and
0:44they're saying, "Well, we don't have an
0:46analysis." But this is an indication of
0:50where we are right now. And if you take
0:52away all the noise and all the bickering
0:54and this and that and just look at
0:56what's actually happening and we'll get
0:58to this because when you start to see
1:00the things going on at the pump
1:02particularly with diesel that is the
1:05ultimate tell. Forget about all the you
1:07know arguments that lead up to it. The
1:09final finale is what is the price being
1:13paid at the pump and is there even
1:14anything left at the pump? And we
1:17already are seeing the be you know the
1:19cracks are already forming there. And we
1:21have to talk about oil because that is
1:24where it all begins. So you know the
1:27asset classes how they interact with
1:29each other. You know gold yields oil
1:32equities and debt and all that stuff.
1:35There's not a one constant relationship
1:38that happens. You know, if you've done
1:40this for a while, you know that the
1:41correlations between these different
1:43asset classes can shift over time
1:45depending on what is front and stage and
1:48center. And right now, it is oil that is
1:52front and stage and center. And all the
1:54other asset classes are taking a queue
1:57off of oil and then adapting to what oil
2:01is doing to then figure out what's and
2:03then you know you have the spillover
2:05effects. So that is the regime and the
2:07current configuration we're in. And
2:08that's why I've been so focused on
2:11what's going on with oil because that is
2:12where it starts and then the percolation
2:14happens across all the other asset
2:17classes. And as I said in my last video,
2:19there's no other chart that makes that
2:21more clear than this one where you see,
2:24and I've shared this, the correlation
2:27between the price of oil and the 10-year
2:30Treasury yield. This is telling you that
2:32they are both in lock step at the
2:34moment. when oil goes up literally you
2:38see the yield go up as well in the
2:40markets and so what what that is telling
2:43you is there's this sequence going on
2:45right now where higher oil leads to
2:48higher PPI which leads to higher CPI
2:52which leads to then the yields having to
2:55go up because inflation is going up and
2:57what happens when inflation goes up that
3:00makes the Fed you know it forces the Fed
3:03h to have to raise interest rates, which
3:05it just did.
3:08And when the Fed raises interest rates,
3:10what happens is that that helps with the
3:12dollar getting stronger. And when the
3:14dollar gets stronger, what ends up
3:16happening is that other assets such as
3:18gold and silver get weaker. And so we're
3:22in this kind of regime over here, you
3:25know, and equities is again, equities is
3:27a innocent bystander, I would say, to
3:30all of this. um you know basically what
3:32the Fed decides, what inflation decides
3:34and all that will then impact equities
3:37at the bottom of the chain. So it's just
3:39I I call it the little brother uh
3:40innocent bystander there. Depending what
3:42all the big boys are doing and big
3:44brothers, then equities will have to
3:46take the queue and make a move. And
3:48we'll talk about equities uh later in
3:50the video as well. But my point here is
3:52oil is where you have to look at because
3:55that has all these downstream effects
3:58that affect all the other asset classes
4:00in the current regime. It's not going to
4:02be like this forever obviously and then
4:03there are other times when the dollar
4:05for example is the one that trend you
4:06know and then there are other times when
4:08it's the bond market that does it right
4:10but right now it's oil and that's why
4:12you have to look at and these these
4:13things keep shifting but the current
4:15regime is this and that's why you need
4:17to keep keep a very close eye on what's
4:19going on and if you look at what
4:21happened with the US 10ear Treasury this
4:24was basically
4:26what happened the past couple days when
4:28you know the the Fed Fed announced an
4:32interest rate hike of 25 basis points
4:36and that made the treasuries go up and
4:40then it started going down the next day
4:44but then it rose back up. So the bottom
4:48line is the Fed increasing
4:5125 basis points and also talking about
4:54further increases this year. You know at
4:56least one plus in the dot plot but now
4:58people are saying two didn't really do
5:01much. We're back at 5% on the 10-year
5:03Treasury.
5:06And it makes sense if you think about
5:08it. This was a news reactive move. Okay,
5:11you know Fed raised rates. not enough
5:13but then you know it it'll be batted
5:15down but then it's you know what is the
5:16constant here is what's going on with
5:19the Middle East and oil and if you know
5:21all that's the bottom you know support
5:25here that's why it won't go down too
5:27much because of that problem and so if
5:30you think about that floor and then you
5:31think about what's going on with
5:33precious metals which is why I'm not
5:35impressed remember I told you this is
5:36the accumulation zone yeah it was the
5:38accumulation zone but we did not get the
5:40break above and now we're another
5:42distribution. So, this is still we're
5:44still in a no man's land and again like
5:47there is that
5:49floor for yields. Okay, you're seeing a
5:54ceiling for precious metals because
5:56again of what's going on with oil.
5:58Again, with oil goes up, inflation goes
6:00up, interest goes up, dollar goes up,
6:04pressure on precious metals. So, the
6:06fundamental story is that there's a lid
6:08for pressure and we see this lid. It has
6:09not broken up like I thought it it could
6:12and it did not. And so I'm not playing
6:14this. I'm waiting carefully to see when
6:16it will do that breakout. But right now,
6:19fundamentally, we're in this regime. And
6:21that's why if you want to play the daily
6:22trades, I'm down. Go be my guest and do
6:25that. But I I'm not doing that. You
6:27know, I'm just going to wait for the big
6:28move here rather than doing the
6:29day-to-day little moves with precious
6:32metals. We got to talk a little bit
6:34about what's actually happening on the
6:35ground because as I said as oil is the
6:38start of all the other downstream
6:40impacts that we're seeing in the market
6:42and you'll see how they're trying to
6:44manage oil keep the prices low as part
6:48of the thing and how it's correlated
6:50with the yields and that's why they need
6:51to keep the prices low. We need to
6:54understand what's happening on the
6:55ground. And what's happening on the
6:56ground is that the Antharala or Houthis
6:59have really joined the war now. Like
7:02this is now become it was first Iran and
7:06this whole you know straight of Hormuz
7:09thing but now it has really spilled over
7:11into Saudi Arabia and now with the
7:13Houthis and Ansarah into Yemen. So now
7:16it's a it's a full-blown I mean I we're
7:18literally in a fullblown escalation now
7:22and between Antsah and Saudi Arabia we
7:25Saudi Arabia is facing serious pressure
7:27now you got to remember these are
7:29families that were appointed to run
7:31these countries okay they were not
7:33elected you know the Brits you know back
7:36then they say okay you rich family you
7:38run it you run it you run it well the
7:40people aren't happy one of the people is
7:42people the Houthies from northern part
7:44of Yemen over here and the Ansar Allah
7:47movement they're unhappy and look
7:49they've been waging war with Saudi A but
7:51the latest thing they did was as you
7:53know they blew up this line so Saudi
7:56Arabia trying to get out couldn't get
7:57out okay so then what they say they okay
7:59we'll bring it out to the west and then
8:01we'll get out this way okay the Houthis
8:03came in and they're like look we're
8:05stopping Saudi Arabia stuff here we'll
8:07let the others go because we spoke to
8:08Trump and you know in exchange for the
8:10US not bombing us we'll let other stuff
8:13go but Saudi Arabia stuff. No, we're
8:15we're blocking. But they didn't stop
8:17there. What they did was they bombed out
8:20this ability to go from east to west.
8:22So, not only did they block it over here
8:25after going down here, they just blocked
8:27even this. Okay. So, that was not good
8:30and that was a big reason why the oil
8:32price had gone up quite a bit and caused
8:35a lot of consternation. So, this blow up
8:38here is one of the more recent things um
8:41that has happened. And you you got to
8:43understand like this is not a small
8:44deal. This is this is very significant
8:47when it comes to that region's hegemony
8:50and what's going on because for the
8:52longest time I mean you don't think sa
8:55this is a situation where now it's
8:57turning into an existential risk for
9:00Saudi Arabia which is one of the largest
9:02if not the largest producers of oil in
9:05the entire Middle East. right now they
9:08are facing an existential situation with
9:11the Houthis threatening now to escalate
9:12and bomb Riad.
9:15So if that h you you know what this
9:17means right? If Saudi Arabia goes down
9:20because of the Houthis this will be a
9:23tremendously huge deal because they are
9:26the largest producer and exporter of oil
9:29in I mean when you think Middle East you
9:30think Saudi Arabia. We got to understand
9:33how bad it is by looking at what is
9:37going on. Now, you know, thankfully we
9:39have open source intelligence and you
9:41know, these people, the community,
9:43they're really good. They're they they
9:45monitor flight publicly available flight
9:47tracking. So, one of them pointed out
9:49earlier in the week that look, this is
9:51interesting. The Iranian government jet
9:54just landed in Iran and I remember
9:57seeing this and saying that that is
9:58interesting, right? What is going on
10:01there? Why is the Iranian jet? So this
10:06opened up a lot of eyes, including my
10:07tiny eyes. It got open, right? So
10:10something's up here. What's going on? It
10:12was maybe it was carrying the defense
10:13minor secretary national somebody is
10:16going on there with a call sign of and
10:19lo and behold later on we find out from
10:22intel that these senior Iranian
10:26officials flew to Saudi Arabia and
10:29negotiated a government to government
10:31payment where basically the Sauds are
10:35paying the Iran you know to let some oil
10:41out to sell it and it was basically the
10:44largest amount. Okay. So the so you can
10:47see who has control of it. It's Iran and
10:49they're like look you you starve for C.
10:51You need cash. I know you got assets but
10:53you got cash. You need cash, right?
10:58Pay us. Pay us some money. That's
11:01basically what happened. And when that
11:03happened, they started selling it. And
11:06the largest taker was in Asia was in
11:08China and then Korea and Japan
11:12also Exxon took some. And so this
11:16was this covert agreement basically then
11:19triggered a lot of activity. Remember
11:22they can't they can't go
11:25here. This is toasted, right? So they
11:27can't go here. So their only option is
11:29to try and figure out a way to sneak out
11:31here. And as you know there's things
11:32called dark transit. turn off the ATS
11:35responder. I did that whole episode on
11:37the details on that. And also shipto-
11:39ship transfers. Well, that's what
11:41they're doing, but with the permission
11:43of Iran after they negotiated this
11:46together, you know, with that payment
11:48deal. And so
11:51that tells you the level of desperation
11:53going on in Saudi. You want to see how
11:54desperate they look NBS where Muhammad
11:57bin Salman go then goes to meets with
11:59the US central command chief to get what
12:04would be presumed strategic military
12:07guidance and how to fight the Houthis.
12:09Right? Remember this is not his first
12:11run with the Houthis. And I still don't
12:13understand why they bombed the airport
12:15in Yemen which just exploded what's
12:18going on today. you know when he first
12:20when NBS first came into power he was
12:22part of you know the military side and
12:25he launched an attack against the
12:26Houthis earlier years ago and then that
12:28blew up in his face right that that blew
12:30up and here we are again but not only
12:33did he go to Senon then he essentially
12:36went to China was like hey China please
12:39tell Iran to get the Houthis under
12:40control and China basically just relayed
12:43that to Iran with you know they didn't
12:46put any threats but I mean this is
12:47telling you the level of desperation,
12:49they had to go to China and China's
12:51like, "All right, you know, because
12:52Chinese exports are also impacted by the
12:54Red Sea." So, they told Iran, but Iran's
12:56just like, "Okay, we heard you. They
12:58don't control." I mean, the Houthis, if
12:59you know who they are, they're very
13:01fierce. Okay? They are very fierce
13:03people. You've not messed with the
13:04Houthis. Now,
13:07on top of that, then he went to Egypt.
13:10Okay? He's negotiating with Egypt's
13:13president. Help, help us, okay? help us
13:16fight the Houthis.
13:19Now, Egypt, you know, if you look at
13:23Egypt,
13:25they they're they have the Suez Canal,
13:28okay? That to them and that's the last
13:31way out. That to them is very important
13:35strategically. The Houthis can it's
13:37within range. They now have ballistic
13:39missiles that can reach the Sewish
13:41Canal. Thank you, Cloud. cloud helped
13:44them program build it right as Anthropic
13:48came out and said themselves.
13:50So if Egypt comes in and helps the
13:52Saudis against the the the Houthis, this
13:56is at risk. It's very hard for me to see
13:59Egypt coming in and helping this man
14:02over here. So that that tells you then
14:04what are you going to do? You're you're
14:05in trouble. the America has I forgot to
14:08say but he went to Trump and asked for
14:10help and Trump basically said no right
14:15then he went to China to ask for help
14:17and China basically just said let me
14:19just forward the message to Iran now
14:21people want to make it say oh China's
14:22going to pressure China's not going to
14:24pressure Iran to do anything like that
14:26okay this is inhouse with the Houthis
14:29then went to Egypt asking Egypt to come
14:32and intervene right no then they had the
14:35Mecca agree agreement. If you don't know
14:36what this is, they they try to do a NATO
14:38style thing in the Middle East with, you
14:39know, Turkey or Turkey and and Pakistan
14:43and and Saudi Arabia sign it in Mecca.
14:45You know, Mecca, the holy, you know,
14:46city. So that tells you it's Muslim
14:49Islam based. You know, if one gets
14:51attacked, everybody else defends that
14:54one getting attacked. Well, Saudi got
14:57attacked. Nobody's defending Saudi
14:58because they had this clause where
15:00existing preconditions do not trigger
15:02this. So there nobody's basically the
15:06bottom line is nobody's coming to help
15:09Saudi Arabia at the moment. And this is
15:11perfect for the Houthis and Iran, right?
15:14This is how they they they put in the
15:16pressure now that we're nearing the
15:19midterms. October is coming up to the
15:22United States and the Trump
15:24administration
15:25because if Saudi folds, right, that is a
15:28that is that is a huge huge deal that
15:33would be I mean I you know it's even
15:36hard to imagine what that would mean. So
15:39what's been going on is there's been a
15:41lot of shipto- ship transfers. Okay,
15:43that has been going on in this port city
15:45of Sohar which all again the open source
15:48intel community saying hey look we see a
15:50lot of ship to ship transfers you know
15:51oil's leaving and and it's like yes
15:53technically that's the mechanics of
15:55what's going on but you got to
15:56understand that why is that happening
15:57was because that plane flew
16:01the dollar agreement just so that Iran
16:03can get some cash and and basically milk
16:05the cow out of Saudi Arabia before it
16:08collapses and so they're allowing this
16:10to happen and doing the shipto- ship
16:12transfer the way to get out. The
16:14Iranians are fully aware that this is
16:15going. They're not idiots. They're they
16:18are letting it happen for the cash.
16:20Okay, now look at what Sar is so far is
16:23over here. It's past the straight of
16:25Hormuz.
16:27Okay, we're back to green. Let's go back
16:29to red. We're past the straight of
16:31Hormuz. And they do the shipto- ship
16:33transfer here so they don't have to
16:35leave. And so that's been what's going
16:38on with the oil market. Now on top of
16:42that there's a lot of desperation. This
16:44is what I mean. So NBS is desperate.
16:46It's going around all the world help. No
16:48one's helping him. Then there's a
16:50desperation in trying to just do what
16:52Trump does with the job owning and
16:54telling the media and the markets
16:56everything's going to be okay and
16:59everything's going to be okay. So they
17:00start saying stuff like, hey, you know,
17:02Saudi Arabia is seeking to return about
17:05half of the capacity within days.
17:08Remember the Houthis blew that up,
17:09right?
17:10half capacity within days. A person
17:13familiar. Okay. I don't know is that
17:16who's this? Homer Simpson. Who's a per
17:18person familiar with the matter? Said
17:20and the key word here is they're seeking
17:22to return. Hey, I'm seeking to become an
17:26alien.
17:28I'm seeking to become a trillionaire.
17:31Does that mean I'm going to be an alien
17:32and trillionaire? No. But I can seek for
17:34it. I mean, come on. Right. So, oh,
17:36you're seeking to return. Okay, fine.
17:38Yeah, you're seeking to return it. Now,
17:42if you look at the damage that was done,
17:44okay, if you look at the damage and what
17:46was blown up, this is not going to be
17:48returned within days. This is going to
17:50take at least weeks, perhaps maybe even
17:54a month or two to fully fix this because
17:56this thing is charred.
18:00Gonna this is going to come back online
18:02within days. This thing is charred. This
18:05is going to take time to build.
18:08The other the other thing is going on.
18:11Okay, this is the Omani port I was
18:12talking about, right? Sahara. So prices
18:15slide. What what I wanted to just say is
18:17you know what they have been doing is
18:19rather than fixing it, which they can't,
18:20they're just building work around pipes
18:23around it. So at least the piping is
18:25going through because the pump is done.
18:27But here's the thing. You put the pipe
18:28in. Guess who's there ready to blow it
18:30up? The hoodies. Well, they already blew
18:32up the whole thing. Blowing up a
18:33rerouting pipe is going to take two
18:35seconds.
18:37So I mean there there's no solution to
18:40this, right? Meanwhile, oil prices slide
18:42as you know SA there's a whole SAR thing
18:45going on, right? The so the SAR port,
18:48the STS transfer. Again, this was all
18:50premedit premeditated and agreed on and
18:53allowed by the Iranians from that
18:55agreement which you nobody talks about
18:57here, but that's really what's going on
18:59underneath. So oil prices are coming
19:02down, right? So they're trying to manage
19:04this oil price and then as the oil
19:06prices started coming down right after
19:08hitting this peak then we had the Fed
19:10interest rate release news and that
19:13added added to it. So you see it's an
19:16attack on all fronts right the timing
19:19and everything and so that helped with
19:21the oil price to go down further because
19:23as I said with the raise of the interest
19:26rates there's lower you know the dollar
19:28goes up inflation possibilities go down
19:32and there's all the trickle down effects
19:33and so that's what we're having and so
19:35we're seeing this downward pressure on
19:38oil and if you zoom out and look at it
19:40this was a downward pressure in oil well
19:42this is absolutely expected look we are
19:44at the major resistance. This is WTI,
19:47okay? We're at the major resistance zone
19:50here. So, it's after this massive move
19:52up, it's probably not going to just go
19:55up all the way when it hits this huge
19:57wall of resistance. It's probably going
19:59to have to digest this move to gain back
20:03some momentum and energy before it tries
20:05to tackle it again and breaks out. So
20:07this, you know, from here to here,
20:11having a correction here, and you know,
20:12it's had corrections on the way up, but
20:14this most recent one here to here,
20:16having a correction is absolutely
20:18expected. You would expect there to be,
20:20and we're having the consolidation to
20:23gather up more energy before it attempts
20:26to do another break away from the wall
20:29of resistance over here, you know, and
20:31so I would expect some more consol. This
20:33is absolutely, you want to see this,
20:35right? Because if it just goes up here
20:37without breaking, then then it's at
20:39risk. But if it if it goes down,
20:41consolidates, and tries it again, that
20:43means the next one's going to be that
20:44much more energetic, if you want to call
20:47it. So I expect oil to do this, right?
20:50But
20:52you know, the truth is no matter how
20:54much jawbon they can say, we're going to
20:56fix it in one day and 50%, you know, I'm
20:58seeking to do that. And then plus the
21:01dollar deals going on with Iran. The
21:03truth is there's no more oil going out,
21:06right? And so this is the truth. They
21:08had to cancel the European crude cargos
21:10for September.
21:12Okay, they said for September, okay,
21:14Europe, you ain't going to get oil that
21:16came out. Now that's not seeking, not
21:19you know. That's like contracts there.
21:22You know, now Bunny's involved,
21:23contracts involved, legal is involved.
21:25That's real deal. And they said they're
21:28not going to send oil to Europe. But
21:30then they then they extended. It's now
21:32not just September. It's an October,
21:34too. Okay. So, is it going to be just
21:36October? Is it going to be November? I
21:38mean, hey, didn't you say you're going
21:39to fix the pipeline half the capacity in
21:41two days? Like, all of a sudden, how
21:43come two months down you can't send it
21:45to? So, this is why I've been talking,
21:47hoping, seeking, job owning, saying
21:49stuff to make the price go down versus
21:51the reality, which is signed contracts,
21:55legal deals of delivery. that's expected
21:57paid money down payments
22:00can't deliver. Okay. So September can't
22:04now October it can't give to Europe
22:07and Iran allowed the Asian stuff to go
22:10out, right? Why? Because China. Why?
22:12Because China is Iran's friend. So okay,
22:16Iran, pay me the money. I'll let you go
22:18out, right? Just they'll milk it. So
22:21they'll let the Asia pretty much China
22:23get and then some the oil, but the rest
22:26know, right? Because you can't fix the
22:28pipeline in two days. And that's why
22:30Europe's not going to get anything. And
22:33now it's not just September and October.
22:35So this is a a disaster that's coming.
22:38You can see the train wreck heading to
22:40Europe. I mean, no oil from Saudi Arabia
22:43to Europe for 2 months. I mean that is
22:46going to make an impact on top of all
22:49the other problems Europe has with the
22:51Ukraine situation with Russia and the
22:54refined diesel not coming out and all I
22:57mean LG and all this Europe you are
23:00looking with winter coming here at a
23:02very very bad situation. This is a slow
23:05motion train wreck you can see coming
23:08and you cannot hide and say oh I didn't
23:11know there are no signs later on. The
23:13other thing that we can see is the price
23:15of physical over premium to buy physical
23:18premium is going up and that means
23:21physical is much more expensive than
23:23paper again. And when that happens that
23:26means there's
23:28going on, right? They're trying to fake
23:30out the paper market and push prices
23:32lower because they need to because again
23:34oil starts with everything. That then
23:36determines inflation expectations. That
23:38then determines the yields. That then
23:39determines the dollar. That then
23:41determines what the Fed's going to do.
23:43That then determines what precious M's
23:44doing. That then determines also what's
23:46going to happen with risky assets like
23:48you know maybe the equities mag 7 words
23:53equities is super contrary. So you see
23:54how it all starts here. Now the other
23:58thing that like cancelled contracts to
24:00delivery from Saudi Arabia to Europe for
24:03September and October that is real deal
24:06not BS is we're beginning to see US
24:10having issues. Okay, not only the price
24:12going up but just no more diesel like
24:14gas station saying out just not
24:17available. I don't care if you have $10
24:18million for a gallon of diesel. We just
24:22don't have any, right? Forget about the
24:23price. It's just zero. we we don't have
24:25it. And that's beginning to happen. It
24:27was California, Florida, I believe even
24:30the southeastern or western part of
24:32Michigan. I mean, there there are
24:33multiple states now having this diesel
24:36supply issue.
24:39And it's not just diesel, right? It's
24:40also jet fuel. Now, you got the airlines
24:43scaling back and cutting flights because
24:47capacity they got to go down. It's I
24:49believe it was like billions of dollar.
24:50There it is. Billion dollars to its
24:53cross. That's a cost that just out of
24:55nowhere went up, has to go up. It's
24:58almost doubled. Diesel also almost
25:00doubled since the war began.
25:03And this is really really important to
25:05understand you see because we can sit
25:08here and talk about and argue
25:12wow you know we we we have so much left
25:15in the the reserves the SPR or oh no so
25:18much oil is coming out of Hormuz or oh
25:21no this and that and argue blah blah
25:23blah no you're wrong look at the end of
25:25the day all that matters all of that
25:27just at the end of the day should
25:28translate into what the heck is the
25:30price at the pump that's
25:32right? All the other stuff I don't
25:34really care, right? Just tell me what
25:36the price is at the pump because that's
25:37all that matters at the end day. Oh, US
25:40is so the biggest export of oil, it
25:42shouldn't impact the US and blah blah.
25:44And there's all these complications like
25:45there's US has to import different
25:46there's different types of crude.
25:48There's different types of refining
25:49capacities and blah blah blah blah and
25:51people get lost in arguing. It's like
25:53arguing politics and religions. Like
25:55dude, just shut the f up and tell me
25:57what what's the price at the pump
25:59because that's all that matters. Okay.
26:02And what the price at the pump is number
26:03one for diesel record high slash now
26:06we're beginning to see outages. So
26:07that's like crisis, right? Like if if
26:10it's not even available, that's the
26:11beginning signs. Okay. The cracks,
26:14desperation of a crisis that's
26:17coming.
26:20Jet fuel double price. Double jet fuel.
26:24Flights have to get cancelled.
26:26Cancelled. That means not flying.
26:29Even gasoline has gone up. Now gasoline
26:32is the one that's, you know, very
26:34important because that's that's the one
26:36that touches the consumer. Like the
26:37consumer, you and I, we we're not buying
26:40crude oil, okay? We're not buying crude
26:43oil. Who's who is buying crude oil. It's
26:44a refiners, right? But we're not
26:46refineries. What we buy is gasoline
26:49primarily. And if you're a trucker, you
26:50might buy diesel. And if you're an
26:52airline, you might buy jet fuel. But the
26:54the the main consumer is buying gas,
26:58right? that's what we buy and gas prices
27:02have gone up as well and that's the one
27:04they try to manage as much because
27:05that's the one that's tied to politics
27:07and votes the most you know consumer
27:09sentiment but it's gone up as well and
27:12it will continue to go up because just
27:13look what's happened in Middle East like
27:15I told you earlier in the beginning of
27:16the video investment banks has thrown in
27:20their hats they're not even going to try
27:22and figure out what their base case
27:23because they don't know we're uncharted
27:25ter what's the uncharted territory
27:27there's no more Saudi Arabia
27:31Then how do you model that? You don't.
27:33We're screwed if that happens. And the
27:35risk of that happening keeps going up
27:37every day as what started with just
27:39let's take out the Iranian leadership
27:42with a weekend bombing and have an
27:44uprising by the public so that you know
27:46we can do a regime change within a week.
27:50then became a full-out war with Iran and
27:53now has spilled over laterally to a
27:56regional destabilization moment where
27:58now everything's going to get
28:00rearranged. Okay, there's new powers
28:02rising up. Iran, the Houthis and all
28:04this and then the old power that were
28:06put into place, these rich families
28:07might be going away and then if you know
28:09this uprising Arab Spring type of stuff
28:12mentality movement continues on and all
28:15these rich families that have been
28:17enjoying you know a luxurious
28:20billion-dollar lifestyle and you know
28:22buying cars and ships and going to Mon
28:24send their kids to Brit schools and
28:26American schools
28:28that you know it's it's it's you can see
28:31where we're going right it's like the
28:32revolution in France like angry poor
28:36people who didn't vote and they just
28:38these these rulers got thrown on top of
28:40them rising up anarah movement right
28:45they don't like it and if this thing you
28:47and then Iran is same thing they never
28:49caved in to the powers that wanted to
28:51put the ruling class in so they're the
28:54stalwart right they're the ones who
28:55never caved in and then so you know you
28:58see this dynamic happening and then you
29:00throw in the political and religious
29:03problems uh between uh the Jewish
29:06religion and the Islamic religion and
29:09the nation state of Israel that was
29:11dumped there, right? It was artificially
29:13created for whatever the reasons, but
29:15that's what happened. It was just carved
29:17out and you know that's what happened
29:19over time. Then then then you see how
29:21this Middle East setup is not getting
29:24better, is only getting worse, right?
29:28It's only growing worse, fur further
29:31than the analysts at banks thought,
29:35right? Which is telling you this is
29:38getting into a very dangerous setup. And
29:43we're already beginning to see the
29:44cracks, the panicking going on and the
29:47supply removal from the market with just
29:50no diesel available already is starting
29:53to happen and this will just continue to
29:56go on. Right?
30:00You're going to have higher prices which
30:02will lead to higher PPI which will lead
30:04to higher CPI which will lead to Fed
30:06having to raise interests further which
30:08will lead to problems with the yen
30:11you know getting weaker so that the Bank
30:13of Japan has to raise rates even higher
30:16to catch up and not just Bank of Japan
30:18but the rest of the central banks in the
30:19world will have to raise rates to catch
30:21up with the US raising rates because
30:23again it's all starting from the oil
30:26right this is why you know this is what
30:27I mean that you got to look at where the
30:29starting point is because there's all
30:30these downstream effects in the current
30:32setup, the regime of how things are
30:34interrelated, the correlation goes is
30:36with oil. And so moving on
30:43to the stock market, the little bro
30:45that's that's just going to get handed
30:46whatever happens with the big bros.
30:48Okay, so you know, I've been looking at
30:50the weekly, you know, chart for the ES
30:55and the divergences still continue. So
30:58it is very clear now higher price on the
31:01weekly lower RSI. We had a little bit of
31:04a bounce here but you know if we do
31:07reach the yellow line I would expect it
31:08to go down. I don't I'm not sure if it
31:11will but we could and when we reach this
31:13would be a good point to actually expect
31:15it to go down. Now if it goes above it
31:18then this may be cancelled right then we
31:21may have to reassess and possibly go
31:23bullish here. But until then, we're in a
31:26negative divergence, which means we're
31:27in a situation where there's going to be
31:30a potential move down, a potential move
31:32down. Look, the RSI never cleared 60,
31:35right? So, it never went to 50. So, this
31:37is still in play. We never recycled. And
31:40so, this continues to be in play.
31:41Remember, this is weekly, so you have to
31:43be patient. It's not going to get
31:44resolved in like a day or two. Stop
31:47looking at the hour chart or the minute
31:48chart to figure out what's going on with
31:50equities. So, this is very much in play.
31:52And that's one of the things I wanted to
31:54just point out. Now, if we zoom in into
31:56the daily, you can see that in the past
32:00few weeks, there is a very clear channel
32:03that has formed. Now, you know, channels
32:06and all this simple basic technical
32:08analysis, sometimes they matter. And for
32:11me, they matter when there's a lot of
32:13touches. Okay? So, it's not just like
32:15one, two, three touches and you're like,
32:16"Oh, look at the channel." I'm talking
32:18like there's seven touches. 1 2 3 4 5 6
32:20seven right in the channel. then that
32:22channel to me is worth looking at. All
32:24right, it's not just random anymore. You
32:26can clearly see it develop. We've got
32:29seven touches here. One, two, three,
32:31four, five, six, seven, right? And we
32:34were not able to clear this even with
32:36this huge rise. We've had huge rises
32:38before, but we were not able to clear
32:40this. But if you look, it's been going
32:42on. It's, as some people point out, long
32:44in a tooth. So what we're at an interest
32:46point here, like we're in the middle,
32:48fine. But when we're at either here or
32:50here, the expectation until this is
32:53broken is that it will go down. Now, I'm
32:55not going to frontr run this, and I
32:56don't recommend people front running
32:58anything and to just get confirmation.
33:00But basically, if we do, if on Monday we
33:04gap above this thing and then we go up,
33:06then that would be very bullish. Be
33:08careful of a fake out, but generally, if
33:10we do do a gap up above this on Monday
33:12and we go up, that would be bullish.
33:14That would mean we'd go up. And that
33:15could happen on the weekly time frame.
33:17You could make a higher high here and a
33:20lower high here and still maintain this
33:23because all you're doing is just setting
33:24yourself up for a bigger fall. And so
33:26that could absolutely happen. We could
33:28make a slightly higher high here on the
33:30weekly as I showed you with a lower high
33:32in the RSI and the weekly and then
33:33collapse there. But my point here is if
33:35we zoom into the daily, we're at a point
33:37of interest. Now until this is broken,
33:40the expectation is we would go down,
33:41right? Because we've had so many touches
33:43and we're long in the tooth. So at some
33:46point obviously this is going to break
33:48out either to the upside to the bottom
33:50side but I'm just bringing up because
33:52this is a very well-formed channel here
33:55and we're at this point of interest and
33:58so what happens on Monday will be
34:00telling and you know I'm in cash over
34:02the weekend because again I'm not going
34:03to play gamble. I'm not a gambler and I
34:06don't know whether it's going to go up
34:08or down. I would think it would go down
34:09but I want to see confirmation. If it
34:11goes down then we're probably going to
34:12very good chance we're going to touch
34:14the bottom over here. So that would be a
34:15good entry point. So that is what is
34:18going on when you zoom in on the daily
34:20for the equities. Now you know you got
34:23to understand also with the equities the
34:25breadth is very low. The S&P 500%
34:27bullish is really low. Look, we're on
34:29like 3% in all-time highs and it's at
34:32the bottom here. You know, usually when
34:34it goes this low, it's when we have a a
34:36sell-off event and then a bottom is
34:38formed where everybody's not bullish,
34:40right? The percent bullish goes down. So
34:43everybody's bearish.
34:45and this goes up. So, this is
34:47interesting to point out. We're people
34:49are kind of bearish, but prices are
34:51still near all-time highs. So, what does
34:53that mean? That doesn't happen. I think
34:55this is the lowest that it's ever been
34:56with the prices near this near all-time
34:58highs. So, what does that mean? Is this
35:00climbing the wall of worry? Do we get
35:02bearishness as we hit all-time high?
35:05All-time high. When you're bearish, what
35:07does that mean? Think about it. That
35:08means there's a lot of people who don't
35:11trust it, but it might keep going up,
35:13which means it's that's one pathway,
35:16right? It's climbing the but never to
35:18this degree. But that also means that at
35:20some point when it the damn breaks, it's
35:23going to be a massive break because
35:25basically we've been floating
35:27onopium.
35:29And so that's what this chart is telling
35:31you over here. And we're in that
35:33situation. And you know the other thing
35:35that's also going on is that there's the
35:37biggest change ever in the one day
35:39panic. Panic index is the S&P volatility
35:42the volatility volatility. It's an index
35:45of a bunch of instruments that measures
35:47panic basically. And it had the largest
35:49one day change ever. So everybody's now
35:51super bullish, not scared after that,
35:55you know, post Fed day uh market you
35:58know move up. So again, the market is
36:00very schizophrenic and you know this is
36:02because again the market is just a
36:04little bro over here that gets swung
36:06left or right based on what's really
36:09going on with oil and the credit markets
36:12and and the Fed interest rates this. So
36:14the risk asset like this just gets
36:16heaved left and right like big swings as
36:19a little bro. This is what I mean what I
36:21was talking about earlier. Now I'll I'll
36:24leave you with this final chart over
36:25here that I saw from I don't even know
36:27blue curtic. Okay. And normally I don't
36:30look at these types of charts because
36:32this has no fundamental play. It's just
36:34telling you like how many times
36:35something happens when something
36:36happens. But I'll share this one because
36:38I thought this was kind of interesting.
36:40So what is it saying is if the stock
36:42market is negative in September through
36:45day 13
36:47they're telling you okay day 13 which
36:51we're we were negative okay for
36:53September day 13 what happens the rest
36:56of the month and you'll see here
37:00the full month change is is negative
37:06okay I think there is once in 1953 Okay,
37:10so like we're talking 70 years ago.
37:13Every other time September has been
37:15negative. So the chances just from
37:17looking at this perspective of September
37:20ending with a negative month is actually
37:22quite high. So when when it's skewed
37:25this much again like I said when when
37:27when you do technical analys I I don't
37:30really know whatever three but if one
37:31two three four five six seven touch then
37:33I'll take a look at it. Again, similarly
37:35to this, if it's skewed like there's
37:37only once in like 70 years or 75 years
37:40something like this happened, then I'll
37:41take a look at that means, you know,
37:43it's pretty much even you don't know
37:44what the outlier and everything, it's
37:46probably unlikely just basically from a
37:48pure prob probability point of view. And
37:50this is one of those cases. So, it is
37:52highly likely that we're going to end
37:54with a negative September, which again
37:56goes with the volatility, seasonality,
37:58and everything else, right? That's why
37:59they all kind of jive together. But I I
38:02thought this one was interesting
38:03because, you know, it's it's so skewed
38:06and since we're already 13th day past
38:0813th day negative in September, the odds
38:11of it being a negative, you know,
38:13September are pretty high and that's
38:16probably the expectation I would ascribe
38:19to. So look here, we we are in uncharted
38:23territory here. Nobody really, you know,
38:26so because it's uncharted, there's no
38:28modeling that you can do like what which
38:31is the whole JP Morgan investment desk.
38:33And to be fair, it's not just them, it's
38:34everybody else. We don't know how to
38:36model this. What happens if Saudi Arabia
38:39goes kaput, right? What happens if this
38:42Yemen thing with the Houthis and Antsar
38:44movement spills over? What happens if
38:47this truly is a reignment of the entire
38:52Middle East and the structure of power
38:54where all these families, these rich
38:57families that were put into place by the
39:00Brits way back when after they just drew
39:02lines around it begin to suffer from
39:06the, you know, the movement of the
39:09people who want to overthrow them
39:12essentially and and don't like how why
39:15they're so rich and you know and
39:17everybody's not as rich and some kind of
39:20a movement like a revolutionary if that
39:22happens with Iran you know you know as a
39:24Buffett and
39:27you know we don't know right but what we
39:30do know is we've seen these types of you
39:34know
39:36events and I and I I stick to what I
39:38call the toilet paper moments because we
39:40saw with co what happens you know people
39:43fighting at at at the supermarket for
39:45toilet paper. Everybody needs toilet
39:47paper all of a sudden. And that's what's
39:49going on with oil. No matter what you
39:51say, whatever. Okay, just throw take all
39:54that and throw it into the trash can.
39:56Just forget about it. What is going on
39:58at the pump? There's some pumps that are
40:01empty. There's no more diesel in the
40:02United States. Forget about us, like
40:04Australia and all, right? There just no
40:07more diesel. What do you need diesel
40:08for? Transport, you know, for you know,
40:10agriculture. You the country, the
40:13infrastructure runs on diesel. The
40:14consumer and cars run on gas, gasoline,
40:18but the infrastructure of a country runs
40:20on diesel. And that is beginning to boop
40:22boop go away at the pumps. And that's
40:26that's your that's the initial cracks
40:28you can start seeing, right? Forgetting
40:31about all the argument about there's so
40:33much oil, there's forget about that.
40:34What is going on? That's what that's
40:36telling you. And then you look at you
40:38the attribution of that is because
40:40obviously it's not because of what's
40:41going on in Ukraine. because obviously
40:43what's going on in the Middle East. And
40:45so if you look into what's going on in
40:47the Middle East, it's gone beyond
40:50everybody's expectation and continues to
40:52escalate and gets worse. Now we've got
40:55spillover into a bigger and broader
40:57regional conflict
41:00with potentially now Saudi Arabia having
41:03an existential moment.
41:06Let's see what happens if the Houthis
41:08actually carry out attacks into Riyad
41:10itself. That would be a huge escalation,
41:13right?
41:15And so if these these factors continue
41:18to go in this spiral towards this
41:20greater and greater problem in the
41:22Middle East and we're beginning to see
41:24cracks right in the pump, like at the
41:27end of the day where it matters to the
41:29people and the companies using the oil,
41:32forget about all the stuff in between
41:34and the chain in between. Then that
41:36tells you we are right getting closer to
41:40a toilet paper moment. And the toilet
41:42paper moment is if you if you have a
41:44toilet paper moment in oil, it like I
41:47said earlier, it is the reverse of what
41:49happened with negative oil prices
41:51because of COVID when the demand shut
41:53down. Nobody wants oil because nobody's
41:54working.
41:56Market was unprepared for that and we
41:58had negative priced oil. Well, the
42:01reverse of that is markets unprepared
42:03for what's happening because they've
42:05been lying basically and trying to
42:07manage it down so much. But then at some
42:09point they can't hide the truth. You can
42:12also call it the Joe Biden moment where
42:14he, you know, at the debate it became
42:16clear that he wasn't well mentally
42:18speaking, not at 100%. And then
42:21everything unraveled overnight. It's
42:23like an overnight thing, right? So that
42:24is that moment that we're approaching
42:26with oil. Now oil is near its highs,
42:29right? I showed you in the chart since
42:30the war started and now it's doing like
42:32some consolidation, a little bit of
42:34correction. But if my my base case and I
42:38have to have a base case even though
42:39nobody knows what's going to happen is
42:41that we're going to approach a toilet
42:43paper. You can see the cracks forming.
42:44You can see it spreading in the Middle
42:46East. It's not getting solved, not
42:47getting better.
42:49And that toilet paper mode is going to
42:51get the markets. Everybody, you know,
42:52they can't hide the lie anymore. And it
42:54just explodes up. And what is the and I
42:57mentioned this the other video. What is
42:58the the reverse of negative oil prices?
43:00Who knows how high it could go, but
43:03it'll be a vertical explosive move up to
43:07unfathomable prices that just don't
43:09compute, doesn't make any sense in the
43:11same way that negative oil prices don't
43:14compute and don't make any sense.
43:16And I'm just basically getting ready for
43:18that moment, right? So, I'm I'm
43:20positioned for such a setup because I
43:22think that is the higher probability
43:24situation that we're heading into given
43:26the trajectory of everything that's
43:27going on and forgetting about all the
43:30stuff in the middle. It's very simple.
43:31What's going on in the Middle East?
43:33What's the trajectory over there? And
43:34what's going on at the end of the day at
43:36the pumps and that's what's going on,
43:38right? You put all the stuff in the
43:40middle, just forget about that's people
43:41make money and they like to argue just
43:43look at these two ends of what's
43:45trajectory. That's why my base case and
43:48higher probability outcome is we're
43:50going to have a toilet paper moment in
43:52oil and I'm going to be ready for it.
43:55Having said that, I'll see you next
43:56week. Have a good one. Peace out.