Tony Greer Sees Gold and Bonds as Year-End Trades as Semiconductors Sell Off

The hosts opened by noting that markets had been falling since Greer's last appearance, with the index they referenced down roughly five to six percent. Felix joked that markets seem to fall apart every time the show books Greer, and Greer said the moves were hard to anticipate, since they were not driven by a specific headline but by the market digesting the midterm results that had been widely expected.

Greer also flagged the TG Macro conference he is running again in February and the speakers he has lined up, before the group turned to the market.

Greer said he had expected a Democratic sweep, though not to the extent that occurred. He noted that markets never fully match expectations, and that the moves he saw yesterday told him a lot of positioning was in place. Solar, which he described as a Democratic trade, rallied sharply, and crowded positions were squeezed as heavily shorted names got run over.

Greer noted that the broad indices nonetheless traded back into trend, while sector-level moves were violent. He drew an analogy to the 2018 midterms, when the S&P fell from the day after the vote until late December, and said a similar setup this year, with the Senate kept and the House lost, looked familiar. He added that flipping midterm seasonality charts upside down suggested a peak in early October followed by a decline into year-end.

Greer said Trump is widely seen as one of the most unfavorable presidents ever, so the Democratic result was largely priced in and the real uncertainty lies ahead. He pointed to specific risks, including data center policy in Texas under a Democratic governor, AI capital spending, and the possibility of a chip glut if moratoriums spread across 40 states. His takeaway was to discount whatever he thought he knew by probably 50 percent, given the number of unresolved issues.

Greer said he is trying to operate from the position that the bond market low was in October. He said he sees a response to that view in the markets, but the move is running into some headwinds. In his view, the idea that rates have at least peaked and could head lower is tied to the oil market, which makes the outlook harder to read.

Greer described how financials, the equal-weight S&P and transports had moved sharply higher in a single session before much of that was reversed the next day. He also said that if oil fell by ten or twenty dollars, the move would be unbelievable for markets, with industrials and miners benefiting, though he said it was hard to see through the noise around efforts to call peace in Iran.

Greer said he believed there were high-powered trades to pursue through the end of the year, and that the market had struggled to find a tradable direction. He listed the sequence so far: the debasement trade early in the year, oil services after the Maduro move, semiconductors rising about 75 percent from April into the SpaceX offering, a cap on the semi rally from SpaceX, and then a rally on peace talk that took oil down to about $70.

Greer said those moves looked like head fakes in different directions. He said semis were now backing off, oil was holding its ground and gold was holding above $4,000, and those were the trades he wanted to pursue. He said he had been talking about a semiconductor bubble and had finally made money on a short that day, though the chart had started to come undone.

Greer raised Anthropic as a potential sell-the-fact catalyst a few weeks away, saying it could push the Nasdaq five to ten percent lower or more by then. His expectation for year-end was that natural resources and commodities would get through the period while tech repriced after getting too far ahead of itself.

Felix said he had been studying unusual days when sectors correlated in odd ways, including sessions when bonds rallied while equities fell and days when oil rose alongside a bond rally. He framed this as the market trying to net out the oil and AI trades. He said Q4 2018 had been a good analog, with a new Fed chair, a potentially false sense of economic strength, and a sharp reversal that eventually led to a Fed pivot.

Greer agreed on the analog and said the October bond bottom was the most important thing to him, pointing to maximum bearish sentiment, an economist cover and an RSI near eight on the long bond. He argued that the bond selloff had been prolonged, and that this made him believe any recovery would take longer.

Greer said the S&P was floundering below its 200-day moving average and that a further ten percent drop in the megacap names could cause real damage. He said he was trying hard not to become too focused on the index, because the cross-currents made a view on the S&P confusing. He then stated his positioning: bullish on basic materials and natural resources, bullish on bonds, and bearish on tech, which he described as a general idea for now.

Greer said he would not be surprised by a rally the next day that relieved some of the day's oversold conditions. His advice was to stick with the trades that were working and manage them closely.

The hosts said that the previous day's rally, which many had called a clearing event as hedges rolled off, should not be read as a real signal. They suggested the session's moves reflected a leverage blow-up, likely a fund that was long all of technology suffering a large loss. Quinn and Greer noted that the many three-sigma moves in both directions pointed to forced liquidations rather than fundamental messages.

Greer said that across the S&P, fourteen sectors had two-sigma rallies or more the day before, and five had three-sigma rallies, including retail, finance, consumer discretionary, airlines, home construction and broker-dealers, all of which reversed the next day. He said this pattern usually signaled a major tell, and that the market might have been relieved by the midterm outcome while an AI bubble bursting weighed on it.

Greer said crypto looked fine to him on the chart, even though a $6 billion hack had hit its credibility. He said he felt bad for people who were heavily invested when such hacks happened, and that the hack took credibility out of security, but his blue-sky breakout on the chart was still intact. He said he held a position but not a large one, because he was somewhat scared of bitcoin, and that the trade was working.

Greer also said his other quarterly ideas, long energy and long bonds, were working, and that he had flagged semis as a do-not-touch level. He said he still saw room in the semi short and that gold and gold miners were a trade he did not want to take his eye off. He described how sentiment on gold had swung from doubt to a new low and back to a bid around $4,100, and said gold was doing what it was supposed to do while the rest of the market was in turmoil.

Greer said he still saw a real trade in AI-linked names, especially given the election results, but he was not sure it could live through the semi bubble popping. Quinn said the selloff was still in early stages, noting that the multi-strategy funds were blowing up, though the pain appeared concentrated in long-short equity funds.

The hosts observed that the bond market had barely moved since the election and was largely unaffected by the equity selloff. Greer said that was a sign of strength, while cautioning that the selloff could remain isolated to equity pods or broaden out, and that investors had to keep focus on the assets they were excited about and plan for when cash was needed.

The hosts said the rates market was still pricing in hikes, which they called surprising, noting that the two-year yield remained above the Fed funds rate. They questioned what was really driving the hikes: if it was the AI buildout and spending by the top tier of a K-shaped economy, both of those drivers were being undercut as equities and spending faded. They also argued the economy was quickly shifting toward a growth slowdown, pointing to demand destruction in parts of the oil market such as diesel, while rate hikes were still priced in.

Greer said the hikes priced in to fight energy inflation shouldn't matter much historically, since gas was cheap on an inflation-adjusted basis. He said the problem was that farmers paying around $750 for diesel saw their break-even analysis break down, even though he thought the wider inflation narrative was false. He added that December hike odds should collapse if the semiconductor selloff continued, since the semi chart was now broken.

The hosts described CoreWeave credit as coming undone, while Goldman Sachs had initiated coverage with a buy rating, and said SpaceX was trading near 140 while JP Morgan had a $500 price target on the shares. They said these recommendations appeared aimed at keeping the selloff from happening. Greer added that a roughly $500 million portfolio of data center loans had reportedly been put up for sale all at once in a rare auction shortly after the Democratic sweep.

Greer argued that the sell side was recommending these bonds because it had about a trillion dollars of AI capital spending to sell and an Anthropic IPO to place with retail investors. He pointed to the SpaceX IPO, which he said had been opened to roughly 25,000 Fidelity accounts because semis were at extreme highs. The hosts joked about how easily retail investors might be able to buy the Anthropic offering, though this was their speculation rather than an established fact.

When asked for his favorite trade from now to the end of the year, Greer said it was gold. He said agricultural commodities also looked interesting, but he was nervous about a growth scare until the Fed moved. He argued that gold could front-run whatever the Fed did, whether it hiked one more time or paused, while growth remained in a tough spot.

Felix said a long gold and short semis position, which he noted was basically what Greer was doing, felt beautiful, and that bonds fit the same picture. Greer said he was watching for the chance that the semiconductor selloff could be avoided, and that energy could move around in the meantime.

Greer said he had added homebuilders as a way to play bonds, and that those positions had kept moving higher after pops. The hosts pointed out that ITB and XHB were pretty similar, and asked how he would approach an entry after a sharp move off the lows. Greer said the thesis and catalysts were probably still there, but the entry was no longer as easy.

Greer described a three-part approach: a bid below the market at a price he was happy to buy, a stop-in order above the market, and a timer that required him to put 20 percent of the position on by the Friday close if neither level was hit. He said this was how he coached people to get exposure when they wanted it but the price was no longer advantageous.

Greer said that with three-sigma up and down days, he was afraid to open the market the next day, and that the only thing to do in this tape was to be ready to pull the rip cord. He said he had covered a semi short into the morning selloff and then tried going long, only to be run over so quickly that he decided he was done for the day.

Greer distinguished between risky trades and less risky ones. He said he held a very different posture on lower-risk trades than on risky trades, and that risky positions needed their own risk management parameters. He compared the process to scaling in carefully until a real breakout happened, and said he had been burned several times in short semis.

The hosts said a headline about Pete Hegseth's removal had reportedly pushed oil down about eight percent, showing how unpredictable headline-driven moves could be. Greer said nobody wanted to put size on oil because of this. He said he did not trust that the diesel and crack spread pullback was over or that peace with Iran was being made, and that the situation made the markets very difficult.