The SPX/WTI ratio fell below its 7-year moving average, flipping us into an energy inefficient regime.

Most fluctuations in the business cycle can be traced to one thing: the cost of energy.

Cheap and abundant energy fuels expansions while scarce and expensive energy precedes downturns.

Combined with the structural debasement backdrop we're already in, this is historically a bad environment for risk assets.

Inflation is settling above target, supply-driven and acyclical inflation are rising again, and the Gold/UST 10y total return ratio continues to trend in gold's favor.

Until that reverses, the bar for owning duration over gold remains high.

Excluding 2020, every recession since 1990 was preceded by an abrupt rise in energy prices.

Even an immediate ceasefire takes months to normalize flows.

We're in that regime now.

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