As tensions with Iran escalate and global energy supplies face potential disruptions, financial assets are increasingly behaving like risk assets, according to Mike McGlone, a strategist at Bloomberg Intelligence. In a recent interview with Cointelegraph, McGlone highlighted a concerning divergence between the volatility of commodities and the relative calm in stock markets, a situation he deems unsustainable.
Historically, such imbalances often resolve through increased volatility in equities, typically during broader market corrections. This time, however, the volatility is particularly pronounced in gold, a market traditionally seen as a safe haven. ‘Right now, 180-day volatility on gold is almost 2.5 times that of the S&P 500,’ McGlone said. ‘So it’s no longer a store of value.’
Gold’s Unusual Volatility
The surge in gold’s volatility is a significant departure from its historical role as a stable asset. This shift, McGlone argues, is part of a broader pattern where traditional safe havens are failing to provide the stability they once did. ‘Gold is not behaving like a traditional safe haven,’ he noted. ‘This could be a warning sign for the broader market.’
Crypto as a Leading Indicator
McGlone also discussed the role of Bitcoin and the broader crypto market as potential leading indicators for global risk assets. With the Bloomberg Galaxy Crypto Index down significantly from its peak, he believes that crypto could be signaling a potential downturn in traditional markets. ‘The crypto market’s performance could be an early warning for what’s to come in equities and other financial assets,’ McGlone explained.
Macro Backdrop Resembles 2008
The current macroeconomic environment, McGlone suggests, is increasingly reminiscent of the lead-up to the 2008 financial crisis. ‘We’re seeing a similar pattern of energy price spikes followed by a sharp reversal during a global economic slowdown,’ he said. This historical parallel adds to the concern that a broader market correction might be imminent.
Outlook on Oil, Interest Rates, and Treasuries
McGlone shared his views on oil prices, interest rates, and the role of US Treasuries. He believes that if volatility rises and economic growth slows, US Treasuries could be one of the few assets to benefit. ‘In a high-volatility, low-growth environment, US Treasuries are likely to outperform,’ he stated. ‘They remain a reliable haven in times of market stress.’
Could the current oil shock trigger a broader market correction? And what does it mean for Bitcoin, stocks, and the global economy? These questions are becoming increasingly urgent as the macroeconomic landscape continues to shift. Watch the full interview with Mike McGlone to gain deeper insights into his macro outlook and market predictions.
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