Macro Voices: MacroVoices #540 Adam Parker: Beyond the AI Bubble: Diversifying Portfolios in an Earnings-Driven Market

Sourced by podcast-ingest on 2026-07-14. Auto-transcribed via AssemblyAI (universal-2, en). Speakers identified by AssemblyAI Speaker Identification using the per-podcast host/regulars hints; the resulting label→name mapping is in the frontmatter. Duration: 41m. Episode page: https://macrovoices.podbean.com/e/macrovoices-540-adam-parker-beyond-the-ai-bubble-diversifying-portfolios-in-an-earnings-driven-market/. Audio: https://dts.podtrac.com/redirect.mp3/mcdn.podbean.com/mf/web/4wuz8zw3ikk3w4jj/Macrovoices-2026-07-09-Adam-Parker.mp3.

Show notes (from RSS)

MacroVoices Erik Townsend & Patrick Ceresna welcome, Adam Parker. They discuss the U.S equity market. https://bit.ly/4aK7d1u

 

 

 

 🔻Download Big Picture Trading Chartbook 📈📉: https://bit.ly/4btGdn1

 

✅Sign up for a FREE 14-day trial at Big Picture Trading: https://secure.bigpicturetrading.com/membership/signup/fOY4YJYX

 

🔴 Subscribe to Patrick’s Youtube Channel: https://www.youtube.com/@Patrick_Ceresna

 

🔴 Subscribe to Erik's Substack: https://eriktownsend.substack.com/

Transcript

Erik Townsend - 1: This is Macro Voices, the free weekly financial podcast targeting professional finance, high net worth individuals, family offices and other sophisticated investors. Macro Voices is all about the brightest minds in the world of finance and macroeconomics telling it like it is bullish or bearish. No holds barred. Now here are your hosts Eric Townsend and Patrick Seresna.

Erik Townsend - 2: Macro voices Episode 540 was produced on July 9th, 2026. I'm Eric Townsend. We're going to take a break from the Hormuz focus of the last few episodes and turn our attention back to U.S. equity markets. In this week's podcast, Trivariate Research founder Adam Parker joins me as a first time guest and we'll focus on the US Equity market. Then stay tuned for our new and improved Macro Voices trading desk where Patrick and Masil will deliver a fast paced market wrap featuring Patrick's Trade of the week, fresh position insights from the commitment of traders reports and a concise breakdown of the key markets you need to watch. Our friends over at ALO Atomics made history this past holiday weekend. Regular listeners may remember that I interviewed their CEO Matt Lozak on this program in our March 5 episode. Now just in the short time since that interview, Alo literally built their first nuclear reactor in just 40 days and then turned it on and demonstrated a sustained nuclear fission ch reaction on the 4th of July. I interviewed Matt and his co founder and CTO Yasser Arafat for Zero Hedge earlier this week and I strongly encourage our listeners who are interested in investing in the nuclear renaissance to watch that video which you can find on YouTube and it's also linked in this week's research roundup.

Patrick Ceresna: Email and I'm Patrick Suresna. We saw another week of meaningful repricing across the macro markets. Crude oil surged roughly 850 basis points week over week as Middle east peace deal broke down and geopolitical risk premiums rushed back into the energy complex. At the same time, the 10 year treasury yields continued to rise sharply, breaking back above their June highs and putting renewed pressure on the rate sensitive parts of the market. Now this week's feature interview guest is Trivariate Research founder Adam Parker. Eric and Adam discussed the US Equity outlook, why earnings may continue to support the market even as valuations look stretched, the durability of the AI trade, and why energy may be one of the more interesting diversification themes inside an otherwise crowded equity market. Eric's interview with Adam Parker is coming up as Macro Voices continues right here@macrovoices.com.

Erik Townsend - 1: And now with this week's special guest here's your host, Eric Townsend.

Erik Townsend - 2: Joining me now is Adam Parker, founder of Trivariate Research. Adam, great to have you on as a first time guest. I want to start because you cover equities quite heavily. Give me the big picture on where we stand now because so many people have said oh well, you know, it's, it's a bubble, it's got to roll over any minute now. Sure hasn't yet. Where is this market headed?

Adam Parker: You know, I don't really talk to that many people who think it's a bubble. Maybe I'm in a bubble but you know, different kind of bubble. But I think the corporate earnings have been strong and the price to earnings probably likely contracts some. And so you're left with a choppy but upward trending US equity market for at least the next 612 months just because of the strength of the underlying earnings.

Erik Townsend - 2: Let's imagine that maybe there is another re escalation of this conflict in Hormuz and oil gets tight again. Do you think that presents a serious event risk to equity markets or are we going to just get through this whatever happens?

Adam Parker: I think investors are really unlikely to pre position for that kind of stuff at this point. I think they've seen the most acute part of it kind of late February into March and I think they'll be skeptical that there'll be huge damage to the earnings growth or outlook. So I don't expect that to cause a meaningful, you know, headline market sell off. I mean look, people have called for 17 of the last zero, you know, you know, problems with their earnings trajectory. So I think it's pretty unlikely that anything form Hormuz could cause a big damage to the equity market from here.

Erik Townsend - 2: And I know you've also commented quite a bit on energy markets with respect to Hormuz. Is oil, you know, only partway sold off or is it sold off too far and overdue a bounce or how do you see the situation?

Adam Parker: I mean it's a little choir talking to the preacher on this topic. Talking to you, it sounds like Eric, but my sense is at least the public US equities, you know, S&P is something like 4% and change. Energy equities, I think you can own more than that 7, 8% because the estimate achievability is above average. I mean in the US equity market, one of the main dynamics in the last year has been the penalty for missing earnings has been way harsher than the reward for beating earnings. So if you're running a diversified portfolio of equities trying to beat The S and P, you just cannot own stuff that misses. So one things I like about the energy stocks right now is I think their estimate achievability is above average. I think, you know, it's pretty clear that the change in the oil price is highly correlated to the change in the net income of a lot of the underlying stocks. And so I like that. And then because the S P is such a AI semiconductor ETF, having energy stocks at a 40 year low on their correlation to the tech sector I think is a nice diversifying feature as well. So I kind of like owning more than the bench weight in energy. In a US equity book, I know

Erik Townsend - 2: you've done some work on semiconductors, particularly Micron technology. Give us the picture of what is driving this incredible strength in the semis. Is it just AI or is it more than AI? Seems like there's just not enough memory to go around. How long is that going to last? And is there a risk that we get to a glut situation where this memory shortage leads to too much production at some point?

Adam Parker: I'm a former fundamental semiconductor analyst for many years, although it's been a long time. So long so that when I was an analyst Nvidia was too small to cover by market cap and liquidity if you can believe that it's changed. Yeah, look, I think this is going to be above compute, is going to be an above GDP growing business for the next several years. And I think the way to think about it is what is the bench weight AI revenue exposure and you know, what kinds of AI revenue are there and where in the AI revenue chain am I willing to be over or underweight that index? We did some work a few months back reading in the top 3,000 US equities with an LLM doing some principal components in clustering and we came up with six AI revenue buckets. These are all companies that have meaningful AI revenue. It's currently about 265 of the top 3,000 US equities by market cap have meaningful revenue, which we define as 5% or more of their revenue or a new product announcement indicating that's imminent. When you do that, every sector is recommended except for consumer staples. All of the great eight except for Apple have meaningful AI revenue. So there's a big chunk of market cap that's exposed here. I think the memory and semi caps which are highly corridor are one cluster and that's the one that's going to be the most volatile. And we kind of think you have to be market weight that we've had a pretty sharp sell off here early in July, but I think there's just so much earnings upside. So we did a bunch of work on Micron in particular, we did 10,000 simulations varying the periodicity and amplitude of their earnings cycle. Kind of came to conclusion that the Stock trades around 4 to 5 times peak earnings and 10 times normalized earnings. Right now we think that's probably a little bit too cheap. So you're gonna get volatility for sure. But I think there's a lot of upside to the base and peak earnings over the next six months. So I don't think it's like the trade's over. And frankly, I don't think it'll be very easy for most people to call that. So when I look at portfolios and I see people really underweight that, I always wonder why that's their highest conviction idea when it's going to be so challenging to get right something that I

Erik Townsend - 2: can't decide what I think about this AI trade is. On one hand, I really am convinced that AI is a trend that could be bigger than the Internet eventually. But the thing I can't seem to reconcile is where are they going to get the energy in the timeframe that they need it? And how does energy not become a gating factor that at some point prevents the growth of the AI industry? What do you think about that? Is there an energy gate and are there any efficiency technologies where eventually AI can do more with less energy? Sure.

Adam Parker: It's all the above, right? I mean power. And if you look at the stocks, you know, people have been bottleneck hunting on that AI path for several quarters now. And you see that with the G Venova and Vistra and Constellations. And you see it with Panasonic and you see it with Corning and Sienna and other parts of the chain. So I think there's no question people are focused on power. The big companies themselves have talked about access to it. In some ways what I think it does is prolong the periodicity of the cycle by preventing it from getting heated up, to use an energy word earlier. I think the challenge is we're in an earnings super cycle for the S&P 500. And being bearish on AI and thinking that you can time where the cyclic top is is going to be super challenging. So I like having exposure to different parts of the AI revenue chain. And obviously power utilities and energy are one meaningful chunk of that.

Erik Townsend - 2: As much as I hate to say it, my take on this is that whether we like it or Not China's got their act together better on energy than we do. Is there a way to play that in the market to benefit from that unfortunate situation for Americans? Great situation if you're Chinese.

Adam Parker: Yeah. I'll defer to you on China's exposure. I'm not so sure of the underlying fundamentals there, but there are definitely ways to play it within the US public market. I think the challenge is a lot of these stocks are really correlated to an AI semiconductor basket. So what you have to decide is how much of that exposure do you want. And stocks that previously had been considered anti correlated or unrelated have become like some of the power and utilities are good examples. Right. So I think you just have to ask yourself what's the bench weight? Do I want to be over or underweight? I think there's a lot of things to own. Even traditional utilities could be good. Gas, oil, the whole, the whole kind of chain, nuke, et cetera. So I'm kind of bullish on that space. And I think the market is trying to look out to 2031 earnings and revenue and say like where could there be potential upside? I hear sometimes people say, you know, you mentioned the bubble word earlier. Hey, this is frustrating. The market's not trading on fundamentals. And I kind of disagree. I think the market is, it's trading on a distribution of outcomes on 2031 revenue. And the companies where the out year revisions are going up I think have outperformed those where they're not going up. And so I think the power energy space is definitely one of those.

Erik Townsend - 2: What others do you see? Where are the other opportunities that you see in the market for exceptional growth?

Adam Parker: Exceptional growth and good stocks aren't always the same thing. And for many years you didn't want to own the fastest growing stocks because they came with higher expectations and more disappointment. But it's interesting you phrase it that way Eric, because in the last couple years fast revenue growth has outperformed, especially among higher quality stocks because the high quality stocks have had multiple contraction. You needed to grow fast to offset it. But I'll take the tenor of your question and say what really hasn't worked but could. I think the healthcare sector is kind of interesting because the market telling us that there's a zero percent chance healthcare is the best performing sector in the market over the next five years. And I think it's like a 30 or 40% chance. And I want to arb that difference. And what the market's telling me is that the government is going to stop paying for Meaningful chunks of what they currently pay for. And again I don't think there's a political will to for that to happen at the rate that's in the price. So we have an aging population. Healthcare revenue per share has grown every year, 30 plus years in a row. The stocks are very anti correlated to AI semis estimate achievability should be above average here. So I kind of like all these things that are kind of potential AI productivity beneficiaries where the businesses have low margins could get better at predicting their employee and customer behavior with AI tools and driving our costs. So I like tech. We're recommending tech, healthcare and energy. I guess to summarize the offensive side of our recommendation set, we're hearing more

Erik Townsend - 2: and more people getting concerned about inflation, secular inflation risks and we're seeing some signals in the markets. What's your take? Do you think that we have a serious inflation risk and if so, who are the winners and losers as a result?

Adam Parker: I really don't think that actually. But again, I think you hang out in the smart energy fixed income cohort of the world more than I do. And I hang out in the thumb American equity cohort. And so we've learned that listening to interest rate strategists to deploy equity capital is a loser's game. I mean when I worked at Morgan Stanley they were wrong every single year forecasting interest rates. Every year I worked there, they were wrong. And if I impregnated their rate view into my equity view, it would have not been helpful. And I'm not saying I can do it. I'm just saying these are all really smart people with the access to the Fed and the treasury and a lot of data and they couldn't get it right. So why the hell would I I just one thing I've observed is that people always think there's some level of the 10 year yield that magically caps the ability for equities to work. And I think that's hooey. I think when the market, when growth is strong, the multiple expands and earnings grow. And so I don't, I'm not that worried that we're in some sort of stagflationary environment or growth scare. And I wouldn't pre position for that in an equity book today.

Erik Townsend - 2: Adam, we've been talking a lot on this show about the Hormuz crisis, but I know you guys look at it from a different perspective, which is not trying to analyze the barrel counting and all that, but who are the companies that might not even be related to the oil business that are going to be the winners and losers as a result of this crisis. You published a note on that. I think it was more than a month or two ago. Give us some perspective on that. How do you think about who wins and loses?

Adam Parker: We have a US Equity lens. And so when I think about giving advice to our clients, it's going to be around who could be the winners and losers. So what we did a while back is we looked at every earnings call transcript, particularly through that April earnings season when the bulk of them report and look for any commentary from the Top S&P 500 companies on Iran and on oil. And obviously that could take the form of many other things, as you know quite well. You've got whatever all the base petrochemicals that come from that some of the companies might talk about ethylene or propylene or ammonia or benzene or all that stuff. And so we wanted to see what companies have been saying on the topic, look at all the transcripts, figure out if their commentary was mixed, negative, neutral or positive, and kind of see what we thought it could mean for estimates. And we came out with a view that it really wasn't. And this was done. The note we published was a couple months ago now, early May. We kind of concluded it wasn't going to have that big of a net impact on earnings. And a lot of the companies that it most negatively impacted were actually in kind of lower quality consumer discretionary, which had sort of largely been beaten up in an anticipatory fashion. So I don't know. I kind of think that the overall net impact from higher oil isn't that great. And that's why I made that comment earlier that I just don't think that Hormuz related news earlier this week there were sort of three boats getting attacked and the President was talking about restricting Iran oil and oil went off. But I just don't see it causing a huge sustained growth scare to US equities.

Erik Townsend - 2: You've also done some work on portfolio construction and how to diversify around. There's so much market concentration on this AI and semiconductor trade. If you've got a lot of beta exposure to the S and P and you're concerned about that concentration risk, what do you do to round out the portfolio and be diversified in case AI takes a nosedive at some point?

Adam Parker: Yeah, I mean, that's a really good question. And we spend a lot of time with clients trying to think through that. I think there's a few things that you can do I mean, one is you have to measure your AI exposure carefully. And that's why I mentioned kind of really trying to think through what are the AI revenue beneficiaries and just figure out which parts of the AI revenue chain you're over underweight. Two, you got to find things that are not correlated to AI semis but also are good. In other words, I can find stuff that's not correlated that sucks, right? So the question is, can I find stocks that maybe have a 0.2 or lower correlation to my AI semis basket that recently had upward revisions or that have positive momentum or decent alphas that a lot of those names are in energy, are in healthcare or select industrials, consumers, places that just aren't the same trade. Because we all know Eaton and Caterpillar and G. Vernova might look like they're in the industrial and utility sectors, but they're just 0.9 correlated to AI semis. So I think it's measuring and then diversifying away from it. I think the defensive part also is important. So what are the low beta names can you own? Maybe it's not your father's Ford, so to speak, it's not maybe staples and telcos, but maybe it's aggregates or you know, maybe software's trading like tobacco used to, or maybe it's other things that are defensive. So I think that's one kind of vector of thinking. And then I think the other thing is like how many stocks do you own? So when I talk to a lot of my clients I say, well, okay, could anything happen in the next 10 years that would make you want to own more or less stocks? If you usually own 50 stocks, could something make you want to own 25 or 75? And what is that? And so we did a bunch of simulation work where we kind of said, said let's pretend you're a 75th percentile stock picker. So like a really solid alpha generator. And let's look at 25, 50, 75 and 100 stock portfolios. And let's measure, simulate thousands of them for every rolling one month period back for 25 years. And let's look at whether it made sense to run concentrated or diversified in various regimes. And our conclusion was pretty strong, that really since 2020 you had to run more diversified than normal, that the drawdowns from concentrated portfolios even for 75th percentile stock pickers have been too extreme. And so running with more than 50 or 75 names for an institutional manager has just resulted in a lot better performance over the last few years and whether that's the multi strats or retail or passive or whatever, it's hard to measure. But I feel like this is a regime where I got to own more names than normal because your point's spot on that if very few stocks are outperforming but the ones that are outperforming by a lot, I can't afford not to have any exposure in that, in that pond.

Erik Townsend - 2: It seems like the obvious thing to do there would be to look for value trades. Are there any value trades in this market? I mean is that the right way to diversify or is there nothing that really fits the bid there?

Adam Parker: I don't really think valuation works to pick stocks. Meaning if I buy cheap stocks and short expensive stocks I make zero money and I haven't made any money doing that for 15 years. So that valuation doesn't work. Neither does peg ratio. What does work actually, and maybe this is just in the regime we're in, is buying stocks that just got more expensive and avoiding stocks that just got cheaper. And the reason is if you look at stocks that just got more expensive over the last quarter, say on price to forward earnings, they actually have a higher probability of beating estimates. And given we're in this regime I mentioned earlier, where the penalty for missing has been so harsh versus the reward for beating, you just can't afford to own stuff that misses. So we've to been able looking a lot more for. And by the way, the probability you beat a second time given you beat a first time is higher than the unconditional probability. So all of a sudden it's not just momentum and more expensive. It's actually there's information in IT. Companies that got cheaper have a higher probability of missing. Well, I don't want to own something that misses. So I think that logic has been more pervasive. And so I don't think value the way people think about it like price to earnings or price to orders or price to book. I don't think that has any information in it at all in less than three year timeframe.

Erik Townsend - 2: And where you're focused on US equities, do you consider the US political cycle in part of your analysis? Because obviously what happens next as we come into these midterm elections could be pretty significant one way or the other for sure.

Adam Parker: I think we definitely think about it. We look at poly market odds on the House and the Senate and there are a group of my clients that speculate on what could meaningful blue shift do to regulation and the financial sector. To healthcare, to defense, to oil, whatever. But I think it's a different question to say, do you think broadly your clients are pre positioning for that today? I'd say not really. Not really. I think it's hard for them. I think it's a little premature for them to pre position for what happens.

Erik Townsend - 2: And do you analyze which stocks or which sectors would benefit from that blue shift if you see it coming?

Adam Parker: Look, when Harris's poly market probability peaked, I think it was in September, before the last election, it started to come down. You started to see the microstructure of the market change a lot. You started seeing the alternative asset managers go up on regulation and deal making. There are ways you can try to measure some changes in the market microstructure. But if I were CFO and I thought I might have a regulatory issue, I'd probably get it done soon with a deal. But I just don't think right now. There's a ton of folks that I'm talking to on the institutional side that are actively changing their portfolio strategy around this. I do think there'll be more conversation going forward. I think there's some confusion about what the President can do unilaterally versus what the House and Senate would do. I think historical data shows that a red president and a blue House and Senate, that gridlock generally is good for equities because you get less sort of change. But the President hasn't always relied on those branches of government to facilitate the change anyway. So I think people are a little bit unsure that there's statistical significance to the historical analog that they should position for today.

Erik Townsend - 2: Adam, the obvious move here in a richly valued market would be to focus on quality stocks. Tell me about how you guys at Trivariat, it's easy to say we only choose quality stocks. How do you decide which ones are truly quality stocks?

Adam Parker: It's a good question. And that's really changed over time. I have a different view and evolving view on that. You know, we have our own way of scoring that we tag stocks monthly as high, mid, low quality or junk into these four buckets. The way we compute it, high quality actually hasn't beaten junk for six years now. So a lot of institutional investors complain, oh, this junk run the Goldman junk basket, the profitless basket, like that's beating quality. And I've been hearing that complaint for a really long time. It's definitely true that junk stocks outperform high quality historically three months before a recession. Bottom where you get a lot of monetary stimulus, fiscal stimulus, and then the stocks that were discounting bankruptcy that are generally the junk stocks outperform a to I assume that's the same in the bond market as well. But what's happened and been different recently is just that the high quality companies have underperformed because the average one maintaining your awesomeness doesn't really carry any price to earnings expansion. The median high quality companies had multiple contraction. And so this sort of ability to improve has been what's better. And so we don't really think quality investing works very well and it hasn't for a long time. It is true that companies where the quality improved, particularly low quality and value stocks can outperform, but it's contemporaneous, not predictive. So you don't want to buy something that just improved its quality. You have to be right that it's going to improve. So we do a lot of work on quality and change in quality. I also think that maybe not everyone understands this, but the way we tag stocks high, mid, low quality and junk, about 82% of the current S&P 500 market cap is top half quality. So like a reasonable question for a long only investor trying to beat the S and P s and P500 would be do you need to be overweight to 82%? I mean maybe you can be a high quality skewed Investor and own 2/3 top app quality and you're way underweight the index. And I think that's been a better strategy, you know, for quality investing over the last few years.

Erik Townsend - 2: We talked earlier about investing in the AI sector. Do you use AI in your research and if so, how so?

Adam Parker: We use it a ton and it's evolving. It's, you know, we or a small firm, Trivarit Research. But we have a pretty substantial token expense, you know, so our firm always has, you know, every day for the base 3,000 US equities, we're, we're downloading or computing hundreds of pieces of information for, for you know, these companies. We're doing the natural age processing of all of their earnings called transcripts and all that. So we've always done things quantitatively and you know, kind of systematically to do the research. But the AI tools are amazing. Like I'll give you an example. It's kind of cool. So, so I write a note every Sunday at 5pm East coast time called a level set. The idea is, you know, we do, I think I do whatever is 15 or 16 institutional investor meetings for an hour every week and whatever. So some ways my Sunday notes reflecting what I'M hearing from investors, questions, sentiment, new data, et cetera. So we use Claude and analyzed all of my Sunday level sets for the last three and a half years to see if there's any subsequent one week predictive power in the language I was using in my level sets. And the answer was there was broken into like very neutral, bearish, very bearish sentiment from my language and found there was actually some predictive value. So there's crazy ways we're using it all the time. I'd say the main way it's awesome, is actually for data ingestion, but there's so many ways to code more efficiently, et cetera. So we're huge users of the tools.

Erik Townsend - 2: You mentioned quant analysis. There's of course also quant funds that in many cases use what originally were very simple algorithmic trading systems. Now they're AI based algorithmic trading systems. What are the impacts on the US market? I've heard that volume of transactions these days, a huge percentage of transactions in US equities are actually robots that are doing the trading. How much does that affect the market?

Adam Parker: It's even less the robots than the pods. In a way, the robots are gaining. There's definitely been some new quant strategies that pure AI have announced. I haven't heard any that have been too successful yet. There's going to be more, but it's actually more the quant pods. So if you think about the multi strats that are out there, and there's a lot of them, most of them have many teams. So pick one multi strat. A right, they might have 30 quant teams at one of these multi strats. The quant teams might run 50 to $150 million each. It might be around 6 to 1200 gross exposure in the back room. So now one multistrat's running $20 billion balance sheet wise. And remember, there's 15 of these firms and each of those teams has hundreds of longs and hundreds of shorts. And the part that kind of melts your motherboard is the holding period of these is usually 3 hours to 10 days with a median of about 5 days. So almost all quant money these days is run with a 20, 30% daily turnover. So if you think about the impact that has in the market, like if I told you I'm running $50 million quantitatively, you might be like whatever, you're like a gnat on an elephant's ass. But when you think about the fact that there might be 35 teams like mine running 1200 gross and then 12 firms like mine, the impact is massive on the equity market trading on a D basis. And a lot of those quants purposely don't operate when companies report earnings because the fundamental news actually fouls up the efficacy of their algo.

Erik Townsend - 2: So are we approaching a point where the human trader is basically outgunned by the robots and you know, it's pointless to try to beat them, or are there still some markets that algos and quants just aren't good at, that humans are better at?

Adam Parker: No, I think there are always going to be tons of area for fundamentals. I mean, look, I spent a lot of time thinking like if I were CIO of a fundamental shop, where would I, I deploy my alpha generating widgets to beat the, to beat the index. And quant horizon super short is really capturing price liquidity. And one other signal, obviously over meaningful periods of time, something about the reported P and L of a company, you know, impacts its value. Right. So I think a lot of my view is like, quant is probably helpful for, purely for like a third of equities, probably quant plus fundamental combined is probably good for about a third and then pure fundamentals is good for a third. I used to have a quant model and I ranked stocks and if I ever met a fundamental analyst and Morgan Stanley, for example, and the model disagreed, everything the fundamental analyst said back to me, I was disadvantaged. So I made a list of that, like where do the quant models fail? And then I realized, no, no, no, no, that's not what I should call the page. I should call it where should fundamental people spend their time? And so these tend to be areas like is there a new CEO or cfo, Is there a deal, Is there a complex capital structure, Is there a litigation, Is there something highly company specific coming, a product, a drug, a new technology, a new, Is there an imminent secondary, Was there a broken follow on anything where a human being can intervene and add value? I think that's about a third of the equities. And I think human beings tend to introduce volatility into equities. And so I think there'll always be room for alpha generation.

Erik Townsend - 2: Well, Adam, I can't thank you enough for a terrific interview. Before I let you go though, please tell our listeners a little bit about what you guys do at Trivariat Research. I think you also have a retail brand as well. Tell us about that. What services are on offer and how people can follow your work.

Adam Parker: I mean, so our core business, Trivarit, we sell to institutions, but the Business that I think your listeners might be interested is called Trivector Research. So they should go to www.trivectoresearch.com which is t R I V E C T O R Trivector Research. And on there we do financial Insights, two or three short publications a week. We do weekly videos where I kind of talk about main issues. I do monthly zooms where I'll take live questions from investors. We do ETF analysis, sort of a Dave Portnoy pizza review style. Of all the ETFs, we write a lot of insights why you should stay fully invested equities and not make short term market calls and how to dollar cost average new business for your advisor. We try to give advice. It's $110 a month or $1,200 a year product. So it's basically just a newsletter and we have a lot of subscribers which we're really excited about. And we provide some weekly data, a dashboard that people want with some unique data about US equity. So if you care about US equities and want insights on that, definitely go to trivectorresearch.com or you can follow us on LinkedIn or on X.

Erik Townsend - 2: Well, Massile Bagnan and Patrick Ceresna will be back with our Macro Voices Trading Desk segment right after this.

Patrick Ceresna: Welcome to the Macro Voices Trading Desk. I'm Patrick Ceresna.

Misel Big Nan: And I'm Misel Big Nan. Let's drive straight into the trade of the week. Patrick, what do we got this week?

Patrick Ceresna: Now, coming out of Adam Parker's interview, the setup is pretty straightforward if you want to stay constructive on equities without adding more exposure to the crowded tech. He was suggesting energy is one of the cleanest places to rotate. So for this week's trade of the week, I want to express this through the X LE, which is the energy sector ETF, which is trading around 55 and a quarter at the time of recording. Now, for investors simply adding energy as a part of a diversified portfolio, owning the ETF outright is a perfectly reasonable approach. But for those taking a more concentrated position, I'd consider a short term asymmetric collar overlay as a volatility dampener. Now, using the 8-21-2026 expiration about 43 days out, I'm looking at buying the $50 put for around 30 cents and selling the $65 call for about 20 cents, creating a 50 by 65 caller for about a 10 cent net debit. This leaves about $10 upside potential from here and the hedge kicks in about $5 lower, giving you a clean way to stay with the energy leadership theme throughout what could be a headline driven summer tape. Now everything I just walked you through, that's what I do live morning at Big Picture Trading Monday through Thursday at 9:45am I'm analyzing and trading these markets live. You can even bring me a setup you're watching and I'll break it down on the spot right there on where's the Trade? To watch me free for the next two weeks, just go to bigpicturetrading.com forward/mv.

Misel Big Nan: All right Patrick, you know what? After a 15 correction from the May highs on energy stocks, it's definitely an interesting tactical entry point. I like that the short call sits right above that 52 week high giving the trade lots of room. All right, let's dive into equities.

Patrick Ceresna: All right Mass, let's dive into it. On the geopolitical front, the US Iran ceasefire collapsed. Now renewed concerns in the markets about the fallout and the impact on energy and inflation. Now the first reactions in the market have been contained to small amounts of volatility. The big question in these markets is have we seen the top in the Cosby and the semiconductors and has a bigger sector rotating rotation begun. Now if this rotation is underway, can it occur without the markets hitting the systematic sell trip wires that could exacerbate that downside volatility. So far we're staying away from those systematic trigger points. The real puzzle to solve here is that if those semis begin a profit taking cycle, will that index be able to absorb the pressure without tripping into those index sell triggers? All indications right now are that those sell triggers are somewhere around that 7300-7350 level on S and P. So those are going to be the technical levels to watch for sure from here.

Misel Big Nan: All right, I want to add to that, Patrick, from a positioning perspective. The S and P and the Dow futures remain in the hundredth percentile of long positioning with a one year look back. This directly reflects the CTA systematic positioning. The market is holding strong so far, but things can get messy if these long positions start rebalancing their exposures. All right, let's rotate to the dollar here, Pat. What do you see?

Patrick Ceresna: Well, listen, the bullish breakout of the 15 month trade range is holding. The consolidation has been contained well above the 100 level on that Dixie. Now looking at some of the cross currencies Thursday, we saw a big break on the downside on that US Dollar yen which could have triggered carry trade pressures. But instead the entire move faded within days which continues to show that the US dollar strength and global funding stresses remain in the driver's seat. Now M How does it look from a positioning perspective?

Misel Big Nan: Perspective we continue to see extreme positioning on US dollar and correspondingly washed out or short positioning on most cross currencies. We don't automatically assume this to be a contrary opportunity until we see when the price stops confirming. Now Pat, let's move out to crude. What are you seeing?

Patrick Ceresna: Well listen, the narrative flipped on a dime from oil trading back to pre war levels below $70 to now having to discount a war risk premium. Oil has to assess global depleted inventories against the constraints mean oil flows through that straight of Hormuz. Now WTI oil rebounded with a trough to peak $9 advance before settling down. The big question is there a built up short positioning that can add short squeeze fuel to the fire? A 50% retracement of the two month decline is back to the $90 level. It was very likely that the forced flows of the over the last month overshot the price of oil to the downside. So this current advance will likely settle in in a much more su fair value zone.

Misel Big Nan: Now as of last week's COP report positioning, the large and small speculators continued reducing long exposures to the 30th percentile. While still far from 52 week lows, it is noteworthy that we are at the lowest exposure since the war began. All right, now let's move forward on gold. What's happening now?

Patrick Ceresna: Mass gold remains in a primary downtrend and the price action continues to exhibit all of the characteristics of distribution. Monday saw the bulls attempt a bullish reversal that was immediately met with supply driving the price back down to last week's trade range. We continue trading right at a psychological round number near 4000 which lies at that Fibonacci retracement zone of the 2 year bull advance which suggests the asymmetry of being long has reset. Now this would be a logical place to see the bulls hold the line, but there's no evidence of that. Now if 4,000 doesn't hold the next level down is a key support line that lies in that 36 to 3700 level while not necessarily necessarily anticipating it to get down there. That would be the target if the 4000 level gives out.

Misel Big Nan: Now interestingly enough I was looking at the report and large speculators were at the zero percentile on a one year look back at the end of May. And while the price has been Weak. You can see the large speculators rebuilding long exposure. So this is quietly occurring on silver as well. Now, looking at other precious metals, we've seen substantial deleveraging in the palladium space now pressing to the bottom decile of its one year look to back. While it looks extreme, it's important to note that long positioning is still substantially higher than its 2024, 2025 lows.

Patrick Ceresna: All right listeners, this is where I want to introduce a new segment called the COT signal positioning pulse where M highlights some of the key changes in the futures markets that we didn't cover yet. So Mass, what are you looking at right now?

Misel Big Nan: All right, let's get into this week's positioning pulse and this week the numbers all point to rates. Since the Fed President's speech, the consensus in the market has flipped higher hard from rate cuts to two or three hikes being priced in. And the positioning shows everyone leaning into that. You know we talked about the dollar crowded long at the top of its one year range, the pound and the yen at their most net short. But look at what the tape is doing. Bonds are back above where they were the day of that speech. And in the newest report, the single biggest move on the board was a 30 year bond. Large speculators covered 85,000 contracts of shorts in one week from near the bottom of the range to the middle while commercials flipped from net long to net short and the small speculators added 30,000 long contracts. That's the first real crack we've seen in the everyone short the long end trade. And if you want to get all of this data and its related charts, you can get all of it@cotsignal.com the moment the CFTC updates its report every single Friday.

Patrick Ceresna: Great observations Mass. Now definitely going to watch this going into next week. Now listeners, reminder that you can find the Trade of the week chart book and the supporting link in this week's Research roundup or on the homepage of macrovoices.com now. That does it for this week's edition of Macro Voices Market Desk. Have a great trading day everyone. Thanks for joining us.

Misel Big Nan: Have a great trading day everyone.

Erik Townsend - 1: That concludes this edition of Macro Voices. Be sure to tune in each each week to hear feature interviews with the brightest minds in finance and macroeconomics. Macro Voices is made possible by sponsorship from BigPicture Trading.com, the Internet's premier source of online education for traders. Please visit bigpicturetrading.com for more information. Please register your free account@macrovoices.com Once registered, you'll receive our free weekly Research Roundup email containing links to supporting documents from our featured guests and the very best free financial content our volunteer research team could find on the Internet each week. You'll also gain access to our free listener discussion forums and research library. And the more registered users we have, the more we'll be able to recruit high profile feature interview guests for future programs. So please register Register your free account today@macrovoices.com if you haven't already. You can subscribe to Macro Voices on itunes to have Macro Voices automatically delivered to your mobile device each week, free of charge. You can email questions for the program to mailbagrovoices.com and we'll answer your questions on the air from time to time in our Mailbag segment. Macro Voices is present presented for informational and entertainment purposes only. The information presented on Macro Voices should not be construed as investment advice. Always consult a licensed investment professional before making investment decisions. The views and opinions expressed on Macro Voices are those of the participants and do not necessarily reflect those of the show's hosts or sponsors. Macro Voices, its producers, sponsors and hosts, Eric Townsend and Patrick Ceresna, shall not be liable for losses resulting from investment decisions based on information or viewpoints presented on Macro Voices. Macro Voices is made possible by sponsorship from BigPicture Trading.com and by funding from Fourth Turning Capital Management, LLC. For more information, visit macrovoices.com SAM.