MacroVoices #551 Michael Every: Decoding The Global Geopolitical Puzzle
Michael Every of Rabobank discusses interconnected geopolitical crises spanning Iran, Ukraine, and the Middle East, arguing that oil prices don't reflect true disruption risks and that energy will increasingly become a tool of statecraft. The conversation covers potential diesel shortages, U.S. policy responses, the Greenland-Denmark security deal, and China's strategic positioning amid global instability.
Summary
The episode opens with the observation that traders must now be oil traders to understand bond yields and FX movements, setting up a discussion of how geopolitics drives markets. Michael Every argues that the current market pricing of oil reflects misplaced hope rather than realistic assessment of escalation risks. He contends that Iran's economic blockade has incentivized military escalation through proxies, evidenced by Houthi attacks in the Red Sea, pipeline strikes, and attacks on Saudi infrastructure. These vulnerabilities remain unpriced because markets assume peace is coming, but Every believes escalation is more likely after the U.S. election regardless of outcome.
On Ukraine, Every discusses Trump's public warning to Zelensky not to hit Russian diesel refineries, followed by Ukraine doing exactly that and destroying approximately 40% of Russian refining capacity. This raises questions about whether Zelensky defied Trump deliberately or whether deeper strategic actors were involved. Every notes the peculiarity that European leaders initially fought hard against the Greenland deal but then went silent, suggesting coordinated messaging or pressure. He emphasizes that the Greenland-Denmark security agreement ultimately gave the U.S. far more than initially reported: permanent military control, veto rights over economic investments, and strategic positioning over the Arctic and North Atlantic.
Regarding diesel specifically, Every warns of genuine crisis potential. Global diesel inventories are depleted, refineries haven't been built in the West for decades, and disruptions in both the Middle East and Russia are creating supply stress. He argues that proposals to ban U.S. diesel exports reflect a broader shift toward energy as statecraft rather than market commodities. The U.S. could strategically allocate diesel supplies to reward allies (like Brazil ahead of elections) or punish rivals (like Europe), forcing policy changes through energy leverage.
On China's strategy, Every argues Beijing doesn't want war but wants Iran and Russia to avoid losing. China is developing redundancies and fallbacks while the U.S. appears to have leverage cards to play within the next 3-6 months (evident in rejecting China's proposal to extend trade truce to end of Trump's term). He suggests Trump's Iran policy, while causing domestic pain, could ultimately strengthen U.S. leverage if it results in Middle East control or even if it destabilizes the region permanently—either way, the Americas and Middle East remain the most valuable energy blocs globally.
Every concludes by discussing stablecoin statecraft. Though the Clarity Act stalled in Congress, the SWORD program (Strategic lending via the Development Finance Corporation) within USAID will deploy stablecoins to geopolitically sensitive regions, providing untraceable, untaxable financial injections to influence supply chains and national behavior. This represents a more covert mechanism to achieve what wasn't approved legislatively.
The market desk segment covers multiple asset classes reacting to rising yields (10-year above 5%, highest since 2007) despite falling oil prices. Patrick Ceresna highlights that Fed funds futures now price 70% probability of an October rate hike and over 50% odds of back-to-back hikes in October and December. Market breadth is dangerously narrow—only five mega-cap stocks are driving the S&P 500 higher while 72% of stocks trade below their 50-day moving average. The Russell 2000 and equal-weight indices are in full sell signals. Yields and dollar strength are pressuring gold, which sits on a knife's edge below its 50-day moving average. Copper remains resilient despite extreme bullish positioning, suggesting strong buyer support. Uranium equities are tired while the physical market holds up. The Japanese yen experienced extraordinary positioning flips from 92,000 net short to 120,000 net long contracts in two weeks, hitting the 100th percentile, only to reverse as dollar strength resumed post-BOJ hike.
About this episode
MacroVoices Erik Townsend & Patrick Ceresna welcome Michael Every. They discuss how escalating Iran–Middle East and Russia–Ukraine conflicts are weaponizing energy markets, why a looming global diesel crunch could fracture the “one-world” oil system into U.S.-led regional blocs, and how Washington may increasingly use tools like export bans, Arctic basing rights, and even dollar stablecoins as instruments of geopolitical statecraft against China and other rivals. https://bit.ly/4iRZKlX ✅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/
Key Insights
- Michael Every argues that current oil price declines reflect market hope for peace rather than realistic geopolitical assessment, noting that Iran's incentive structure under economic blockade makes military escalation more likely than diplomatic resolution.
- Every contends that Ukraine's strike on Russian diesel refineries destroying ~40% of capacity may not have been purely defensive but potentially coordinated by deeper strategic actors, given the global consequences and the fact that European leaders who initially protested the Greenland deal suddenly went silent.
- The new Greenland-Denmark security agreement grants the U.S. permanent military control, veto rights over all economic investments including minerals and potential oil, and freedom to expand bases without Danish veto—a far more significant strategic win than initially reported by mainstream media.
- Every predicts that the U.S. will increasingly treat energy as a statecraft tool rather than a market commodity, potentially using diesel export restrictions to reward allies (Brazil ahead of elections) or coerce adversaries (Europe to pressure Zelensky).
- A genuine global diesel crisis is possible given depleted inventories, lack of refinery construction in the West, simultaneous disruptions in Middle East and Russia, and the critical role diesel plays in food production and logistics.
- Every argues that even if Trump cannot topple Iran militarily, continued destabilization of the Middle East serves U.S. interests by maintaining energy advantage over China and Russia, as the Americas plus a destabilized but U.S.-influenced Middle East represent the world's most valuable energy blocs.
- The SWORD program within USAID will deploy stablecoins to geopolitically sensitive regions as untraceable, untaxable financial tools to influence supply chains and national policy behavior—achieving via covert mechanism what Congress rejected in the Clarity Act.
- Patrick Ceresna identifies that the 10-year yield surge to above 5% (highest since 2007) represents not just rising rates but accelerating velocity that typically precedes attempts to stabilize markets, making this the single most important factor for asset pricing across all classes.
- Market breadth has collapsed to dangerous levels with 72% of S&P 500 stocks below their 50-day moving average while only five mega-cap stocks drive index gains, creating fragility despite bullish headline indices and raising correction risk into the midterms.
- The Japanese yen experienced an extraordinary 110,000+ net contract swing to net long positioning (100th percentile) in a single week before reversing on dollar strength, demonstrating positioning crowding vulnerability even in legitimate technical pivots.
- Every emphasizes that accurate geopolitical assessment requires cross-disciplinary, multi-layered analysis across geography, strategy, and economics—not just headlines or economic data—making most mainstream media coverage fundamentally wrong about unfolding events.
- The simultaneous pressures of rising real yields, dollar strength, and geopolitical uncertainty create a multi-headed constraint on assets like gold and risk assets more broadly, with potential for either stabilization or continued deterioration depending on whether the 10-year yield continues higher.
Topics
Transcript
The joke at the moment is if you're an interest rate trader or an FX trader at the moment, you have to be an oil trader. You've got to look at that to understand what bond yields are going to do. That was Michael Every. I'm Eric Townsend. This is Macro Voices. And boy, this episode's going to be a doozy. We're going to talk about the entire world of geopolitics, all the way from what's going on with Iran to what just happened with this escalation in the Ukraine conflict and the strikes on the Russian diesel refineries, and what happens if we have a diesel crisis, diesel exports from the United States, China, Greenland, Denmark, stable coins, and…
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