'It's Over': Strategist Reveals Which Assets Are About To Crash | Mike McGlone
TL;DR
Bloomberg Intelligence strategist Mike McGlone argues that commodity markets are experiencing a 'bull market in elasticity' where prices cannot sustain rallies, predicting crude oil will crash toward $50 by the midterms and warning that gold, copper, and crypto are now dangerously correlated to an overvalued stock market (2.4x GDP) that threatens broad deflationary wealth reversion.
🛢️ Oil Market Dynamics & Elasticity 3 insights
Crude oil target of $50 by midterms
McGlone forecasts December WTI crude futures will fall from $77 toward $50 by November due to elastic supply dynamics and political pressure from US leadership to lower energy prices ahead of elections.
Natural gas leads deflationary collapse
US natural gas prices collapsed from $7 to $2.50 per MMBtu in Q1 2024, repeating the 2022-23 pattern of leading crude oil, corn, and soybeans lower through persistent supply surpluses.
Western Hemisphere supply glut
The US and Canada now produce a surplus of roughly 8 million barrels per day of liquid fuels, ensuring that price spikes are rapidly met with supply responses that force prices back down.
📉 Metals & Stock Market Dependency 3 insights
Gold volatility hits 2009 extremes
Gold volatility spiked to its highest level versus the S&P 500 since 2009, with McGlone warning the metal has become a 'highly volatile spectator risk asset' that will decline if equities fall.
Copper requires rising equities
Copper prices have tracked the S&P 500 closely for a decade (flat when divided by the index) and cannot sustainably rally without the stock market making new highs, despite electrification narratives.
Industrial metals carry 2x equity beta
The industrial metal complex exhibits approximately 2:1 downside leverage to equities, meaning a 10% S&P correction could trigger 20% declines in copper and related commodities.
💥 Macro Deflation Thesis 3 insights
2008 inflation-deflation parallels
McGlone sees echoes of July 2008 when CPI peaked at 5.6% with WTI at $147 before everything collapsed, suggesting current refined product spikes will trigger demand destruction and deflation.
Stock market at 1929/1989 extremes
With the US stock market valued at 2.4x GDP—the highest since 1929 in the US and 1989 in Japan—McGlone warns that wealth reversion is inevitable and will drag all risk assets lower.
Crypto breakdown as leading indicator
The collapse in Bitcoin and cryptocurrencies from last year's peak served as an early warning signal for the deflationary pressures now appearing in gold volatility and commodity elasticity.
Bottom Line
Investors should treat commodities and precious metals as derivative trades on the S&P 500, recognizing that at 2.4x GDP levels not seen since 1929, the stock market faces inevitable wealth reversion that will drag oil toward $50 and gold lower regardless of inflation narratives.
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