Tom welcomes back Senior Commodity Strategist at Bloomberg Intelligence, Mike McGlone for a discussion on the outlook for energy, metals, and the broader macro markets. Diesel prices at all-time highs, driven by geopolitical disruptions and refining bottlenecks, are likely unsustainable. McGlone pointed to natural gas as a leading indicator: the January futures contract, the apex of the curve, has declined this year despite a supply glut, signaling downward pressure ahead for diesel, gasoline, and crude oil. The U.S. has become a massive net energy exporter, with record production and growing surpluses from Canada, Brazil, and Guyana, which will eventually overwhelm temporary supply constraints.

Mike expects energy prices to fall, potentially accelerated by political pressure ahead of midterm elections. Copper, trading near all-time highs, is a “sock puppet” to the stock market, highly correlated and overextended. Managed money positions are extremely long, and CME inventories are at record levels relative to global exchanges, suggesting a liquidation risk if equities correct. Gold, while at elevated levels, is flashing warning signals: its volatility and correlation with the S&P 500 are at extremes, and historically, when gold gets exciting, investors should be cautious. The metal’s outperformance versus the long bond and equities may indicate a peak, with a potential enduring top similar to 2007.

The U.S. stock market is historically expensive relative to GDP and debt, and McGlone sees a normal post-inflation deflationary reversion as likely. The next big trade may be long Treasury bonds, with the 30-year yielding over 5%, offering attractive risk-off value. Political cycles, tariffs, and the administration’s aggressive stance could accelerate a correction, and McGlone expects a significant shift in the midterms.

Overall, he advises caution across risk assets, favoring bonds and anticipating a period of mean reversion that could define trading opportunities in the coming months.