Why Most Financial Assets Are Behaving Like Risk Assets, According to Bloomberg’s Mike McGlone
As tensions in the Middle East persist and threaten to disrupt global energy flows for an extended period, a prominent market strategist is warning that a broad shift may be underway. Mike McGlone, a senior commodity strategist at Bloomberg Intelligence, suggests the current environment is forcing a reclassification of traditional assets. In a recent interview with Cointelegraph, McGlone argued that the macro backdrop is compelling most financial assets to behave like risk assets—meaning their prices are increasingly driven by sentiment and growth fears rather than fundamental value.
An Unsustainable Divergence in Market Volatility
McGlone points to a curious and potentially unstable dynamic: while commodities like oil have seen dramatic price swings, volatility in major stock markets, as measured by the VIX, has remained relatively subdued. He views this divergence as unsustainable from a historical perspective.
“Historically, such imbalances tend to resolve through increased volatility in equities — often during broader market corrections,” McGlone stated. This pattern suggests that the calm in stocks may be temporary, with energy-driven uncertainty eventually spilling over into equity markets.
Gold’s Eroding Safe Haven Status
The unusual volatility dynamic is even evident in gold, the classic safe-haven asset. McGlone highlighted a striking data point that challenges gold’s traditional role.
“Right now, 180-day volatility on gold is almost 2.5 times that of the S&P 500,” he said. “So it’s no longer a store of value.” This inversion—where gold is more volatile than stocks—indicates that gold is being traded more like a speculative commodity or currency hedge in the current climate, rather than a stable repository of wealth. This assessment aligns with periods of high inflation expectations or sharp interest rate movements, where non-yielding assets like gold face headwinds.
Cryptocurrency as a Leading Indicator?
McGlone also discussed the crypto market, particularly Bitcoin (BTC), proposing it may be acting as a leading indicator for global risk assets. The Bloomberg Galaxy Crypto Index has fallen significantly from its peak, a move McGlone interprets as a potential signal for broader market weakness.
His thesis is that crypto markets, with their 24/7 trading and sensitivity to liquidity and risk appetite, often price in shifts in global macroeconomic sentiment before traditional markets open. A sustained downturn in crypto could therefore presage a pullback in risk assets across the board.
Macro Parallels to the Pre-2008 Era
The strategist draws a parallel between current conditions and the period leading up to the 2008 financial crisis. Then, a spike in energy prices contributed to economic strain before a sharp reversal occurred amid a deepening global slowdown.
“The macro backdrop increasingly resembles past periods of stress,” McGlone noted. The current oil price shock, driven by geopolitical risk and supply constraints, mirrors that pre-crisis energy spike. If history is a guide, a subsequent economic slowdown could trigger a sharp decline in oil prices and a broader asset sell-off.
Asset-Specific Outlooks: Oil, Rates, and Treasuries
On specific assets, McGlone shared his views. He expects oil prices to remain elevated due to geopolitical risk premiums but vulnerable to a downturn if global growth falters.
For interest rates, he anticipates that persistent inflationary pressures—exacerbated by energy costs—may keep central banks restrictive for longer, a headwind for growth-sensitive assets.
In this scenario, he identifies U.S. Treasuries as one of the few potential beneficiaries. If volatility rises and growth fears intensify, the demand for the ultimate safe-haven asset, U.S. government debt, could increase, pushing yields lower and prices higher.
The Core Question: Oil Shock and Market Correction
McGlone’s analysis converges on a critical question for investors: Could the current oil shock be the catalyst that triggers a long-anticipated correction in global markets? His framework suggests the conditions are aligning—persistent energy volatility, a divergence in market calm, weakening leading indicators like crypto, and a macro setup reminiscent of past stress periods.
For Bitcoin, this means it may continue to be highly correlated with broader risk sentiment in the near term. For stocks, the period of low volatility may be masking underlying fragility. For the global economy, the path of energy prices and the response of central banks will be decisive.
To hear McGlone’s detailed market predictions and full macroeconomic outlook, watch the complete interview on Cointelegraph.
This interview has been edited and condensed for clarity.
