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- [00:00]
Mikael Rusmal
New week,
- [00:05]
Andreas Denel
Big moves.
- [00:08]
Mikael Rusmal
You ready? Andreas on the data maker on the floor. Turn the headline into trade. You can know from yields to inflation, every chart, every trend. Get the story. Get this set up. From the open to the end. They try to be as actionable and as honest as possible. But keep in mind that their predictions
- [00:33]
Unidentified Guest
might be sometimes maybe good, sometimes maybe good. Sometimes maybe sometimes maybe Shit sheet. Shit, shit, shit, shit, shit, shit, shit, shit. Sometimes may be good. Summertime, it may be.
- [00:47]
Mikael Rusmal
It's Macro Mondays. Big picture Clear Play. Stocks, bonds, fx crypto on the way. Get context. Strategy right now on your screen. Macro Mondays. Level up your week.
- [01:06]
Hello there. Welcome to Real Vision. Welcome to Macro Mondays. My name is Mikael Rusmal. I'm joined as usual by Andreas Denel and if I'm not sure if you can see it in the caption of Andreas here, but we are joined by your son Andreas as well in the studio.
- [01:22]
Andreas Denel
Yeah, we have a live audience today. So here we go.
- [01:26]
Mikael Rusmal
It's going to be wonderful, wonderful. Great to see him and Andreas, quite an eventful afternoon, European time, morning, US Time we've had here. So we both, both have interesting news out of Iran, the break off of WhatsApp negotiations apparently between us and Iran. We have brand new ISM numbers. So we have a lot to unwrap and we obviously entered a new month. So we're going to try to unwrap what we see coming in June, both from a macroeconomical, but also from a macroeconomical standpoint. But also throw in a few trade ideas. Maybe, maybe if we have time for it, we're just going to touch upon Bitcoin that you also wrote a bit about in your Stenos Signals report address. And speaking of your Stenos Signals reports, it's out this afternoon or later today. That's one of the three paid articles that we publish every week on Real Vision. That's for the pro chair. If you're not interested in the approach here, you can always watch Macro Mondays. That's for free every Monday. But we do urge you to look at some of the options at Real Vision. If you opt for the pro chair. You can also catch Andreas monthly State of the Union show this Wednesday. What can people expect there, Andreas?
- [02:35]
Andreas Denel
Well, it's early days, but it seems like we have more or less flatlining inflation momentum in the US Especially since the first week of May, which is a big surprise in many ways, given that we don't have a resolution to the straight of a moose. And given what happened 45 minutes ago, it looks even Further away that resolution, to be honest. So a lot of surprises still in the macro landscape, in my opinion. And remember that roughly two months ago everyone was caught in a very doom and gloom like storytelling around the Iran war and how it would impact global supply chains, growth and all of that. And we stayed with a very positive view on the economy due to our now casting. It basically looked a lot better than what was portrayed in many financial media outlets, et cetera. And it allowed us to capture this massive rally that we've seen over the past two months. And my main conclusion in the editorial today is that we're currently high fiving each other right, left and center around our abilities to find the next bottleneck trade in AI and the next bottleneck trade in electricity. But remember that macro is basically the driver and therefore macro is, you know, everything and it will be everything in that show on Wednesday.
- [04:00]
Mikael Rusmal
Absolutely. Looking forward to that, Andreas. Remember guys, as you alluded to a little bit here, over the past two months things have been mostly good. But remember that our trade ideas, while actionable and well researched, might be summertime,
- [04:14]
Unidentified Guest
it may be good summertime, it may be shit.
- [04:17]
Mikael Rusmal
That's always important also to mention, even when things are going okay here, Andreas. Okay, drez, let's maybe start on the ism that just came out. Very, very strong number, surprisingly strong from what I saw. What's your initial reaction here?
- [04:35]
Andreas Denel
So again, it rhymes very well with what we're seeing in our now costs. We're talking about a US economy that is mostly accelerating in manufacturing terms, not as much in services terms. And I actually think this is what you should expect for the upcoming couple of quarters as well, since the whole AI buildout is very manufacturing heavy, not least due to the hardware trade that we've talked a lot about over the past couple of months, but obviously also due to the on ground capex that follows such a build out of data centers, et cetera. Right. So very satisfied to see that the manufacturing sector is basically growing at a faster pace than it did pre war. Big surprise to many, but it was well flagged in our outcasts, so. And the new orders index is rising as well, so I mean, it looks good for the next couple of months here. Again, this has caught many by surprise, but if you follow the data on ground on a day to day basis, it shouldn't really surprise you, to be honest.
- [05:37]
Mikael Rusmal
Absolutely. We're going to get back to the inflation part of it, obviously. Let's just touch upon Iran a little bit before moving on to what we see happening. In June and, and some of the bottlenecks trades we've been looking at. Andreas, you mentioned it 45 minutes ago. We had the news that Iran has broken off. Message replies is probably one translation of what we saw in Farsi. I'm not a Farsi speaker. It's probably a few WhatsApp channels, if I'm being completely honest, that have been shut down, that have served as some of the main communication links between the US and Iran. We also saw also over the last few days, increased attacks between the US and Iran. My reading on that that remains even with what we've seen today, is that the ceasefire and the peace process is very, very fragile. But as long as both sides still stick to the wording of a ceasefire, then we have a ceasefire. So as long as the attacks are centered around the Strait of Hormuz, close to the water, it you can somehow claim that it's contained within that realm, that it's different from attacks on Dubai or Tehran or whatever, but it's becoming really, really fragile and rare. This is a long way from the almost this is almost over that we've heard over and over again, especially if you follow Barack, Ravid and the Axios guys. I believe they do a great job. But we've heard from them I think a dozen times at least that this is it now. It's done. We're still waiting for that. Here we go. Message from the White House. But Andreas, what do you make of the market reaction? We're seeing oil obviously spike on these news. Do you think the market patient is running out with this or are we still pricing this in fairly?
- [07:31]
Andreas Denel
So I actually think the market reaction is fairly benign. I mean, oil is up a little bit more than a handful of percent. But if you look at the US equity market, I mean, yeah, sure, we're down a little bit, but it's almost flat on the day. Right. For what it's worth, this Iran war, outside of the few first weeks, has proven to be a lot less relevant for the global economy than many fear. Right. And I know there's an end date to that view since we cannot rely on global storages of oil and jet fuel and what have you for the remainder of the year. So we need a resolution probably within this quarter or the early parts of next quarter for this global upswing to remain intact. But for now, the market seems pretty calm. About what we've received from the Iranian News Bureau just 45 minutes ago, as far as I can tell, Mikkel, they basically tell the US to rein in the Israeli Defense Force. Basically, that's the key message you, you need to, to stop Israel for us to sign a deal. And you said this to me on Friday. Expect Israel to do something now because they have a window of opportunity before the deal is signed. So, so maybe this is, you know, the last saber rattling. I don't know. I mean, I, I've called an end to this war quite a few times and I think I should refrain from doing it again.
- [09:03]
Mikael Rusmal
Yeah, but we've, we've made a lot of, a lot of money doing so, Andreas. And that is, at the end of the day, why we're here. No, but you're right. I feel like, Andreas, it's like when you're at a night of, you're, it's getting late, it's three, four o', clock, you can hear, okay, these are the final songs. You need to make a move now. I think that is essentially what, what, what, what Israel is up to. It may sound a little bit cynical. I know people are dying, it's horrible. But from a strategic standpoint, that is, that is, they have a window when we have a, a true peace between the US and Iran. The US will not allow Israel to, to continue these attacks. So they need to get some business done and they always have a list of things that we want to do inside their neighboring countries and they're trying to get as much of that done because it buys them time and advantage over Hezbollah moving forward. So, Andreas, once again, I have no effing clue when this thing is going to end. It seems like Trump keeps getting close to a deal, but then changing his mind. Getting close to a deal, then changing his mind, always trying for slightly better terms. Still quoting the fact that the Iranians believe they won this and they have a legitimate claim that they have at least held out to draw. So it's very, very hard for Trump to find an off ramp that satisfies his requirements for calling this a victory. But anyway, the economy is still doing quite well. We have the supply chain issues, some of them are being worked on, some of it is handled through demand destruction. Not as much, perhaps, perhaps still a fear scenario. And that's the last thing I want to ask you here, Andreas. What do you see as sort of the pain threshold here time wise? If this drags on throughout the summer, is that a problem? How far do we need to go before this truly becomes a problem?
- [10:48]
Andreas Denel
My best guess right now is that we have comfortably still have six, seven weeks left of reserves. But of course, if you get very Close to that deadline, the leverage from the US side weakens quite a lot if I'm right. So let's see, my base case and my working assumption has been that we need to strike some sort of ceasefire deal or prolonged deal, including at least a partial reopening of the Strait of Hormuz sometime during June for the economy to, to keep accelerating. And I still hold that view. Of course, if they close the shipping route through the Red Sea as well, which is something that, you know, they, they've threatened with, you know, using their alliances around the globe. Let me put it like that. In this case, obviously the Houthis in Yemen to, to wreak havoc on that part of the supply chain as well. And if they strike a few ships there, I, I, I'm pretty sure that we'll get a few n markets. Right. So that is obviously the one that we need to watch now. But they've had so many opportunities to do so and it doesn't seem like the Houthis are really willing to do it. I'm, I'm not really capable of explaining why, but, but, but why now? They've had plenty, plenty of chances to do it.
- [12:10]
Mikael Rusmal
Yeah, exactly. It seems like that there is a willingness to contain this from Iran standpoint and still keeping that leverage alive because they are losing the Honus leverage long term. But yes. So let's move on a little bit. Andreas, to look at the month of June. We've just talked about the potential top in inflation good ism number and things are looking quite okay. And Andreas, in our portfolio which has been doing great this year, we've picked out currently nine thematics that we're trading against. You can, you can track the portfolio live on Real vision. Myself personally, I've skewed my investments a bit more towards two of those thematics and that's obviously the two of the nine that have performed horribly to R326 robotics and military drones. We had a bit of life support in the military drones last week and I still believe completely in these topics. Robotics is still, especially industrial robotics, still struggling a little bit here in 26. But then you sent me this video, Andreas, and this revived all my hopes in industrial robotics. Let's see if we can get a plate here.
- [13:20]
Today.
- [13:21]
Video Narrator
SHIFT is launching free house cleaning services in New York City. You might be asking, how is this possible? This moment has been a long time coming and it's something we're really proud of. The future has always started in New York. This time it will start in your apartment. The current across 15 countries, Shift already pays tens of thousands of people through one app to record their everyday work and chores. Our users wear a small camera while they work. And this footage teaches the next generation of robots how to help every home clean. Today lays the groundwork for a home that cleans itself tomorrow. And we're not stopping at clean apartments. Free plumbing, cooking, building fixing. Tomorrow's robots learn from today's work. Shift is the place that pays for that work and the place that hands the benefits back. Today in New York, tomorrow anyone can take part. Welcome to the shift,
- [14:23]
Mikael Rusmal
Sandra. My thinking here is if there's so much potential money to be made, and it's the really potential because these, these home service robotics aren't really on the market, aside from vacuum cleaners, if there's so much money to be made in this that it pays off to now way before these things are on the market. It's already profitable to, to clean people's homes for free. I mean it, the potential must be huge in this, am I right?
- [14:50]
Andreas Denel
Of course, of course the potential is huge. I wouldn't call it profitable as of today.
- [14:54]
Mikael Rusmal
Right.
- [14:55]
Andreas Denel
But the point here, and I guess it's a thing that I've kind of missed this year, is that for AI to work in real life situations, such as cleaning desks or whatever it is, you need loads and loads and loads and loads of recordings, right? And the one example we have of millions of hours of recordings in real life is in autonomous vehicles. We've had Teslas on the road for a long while, we've had Waymos on the road for a long while, and they've just doubled their driven autonomous miles over the past six months or something like that. It's a true exponential case by now. But in a load of other real life practical issues, we still need the recordings first for the AI to be trained. And therefore we're probably talking years before those robots, those humanoid robots are really, truly capable of solving these things. And the question is whether we have patience enough in this cycle to wait for that. I fully believe in this trend, say five, seven years ahead. But the question is whether we, we will get enough progress in some of these cases related to humanoid robots already this cycle. I doubt it, because we need all of these recordings first. So, you know, in practical terms what we've done is that we've started to tilt our robotics portfolio towards autonomous miles as a simple consequence of that. Because there, there we actually have a load of recordings already that you can use to train the models.
- [16:54]
Mikael Rusmal
Makes a lot of sense Andreas. Okay, let's zoom into the matters truly at hand here in the month of June. We've talked about this being at least partially liquidity driven rally. Where do you see the liquidity situation right now? We have the sort of our go to chart coming up here.
- [17:14]
Andreas Denel
Yeah, there it is. We have another good month ahead of us, largely driven by technicalities since the US treasury is currently underestimating the issuance needs. And this is in sharp contrast to what we saw during the second half of last year. Remember how the deficit actually proved to be better than feared during large parts of last year in parts, due to the tariffs intake? And yeah, currently the terrorist intake is not particularly strong to say the least. Right. We've had two rulings against the tariffs policy of the administration. Now, you know, first these reciprocal tariffs on a one on one basis versus other countries, they were deemed illegal, I think it was in January. And then the administration replaced those reciprocal tariffs with a 10% global tax instead and that was deemed legal as well. So now they're stuck with the tariffs intake that is probably at max index 40 of what they hoped for. So it's a big deal for the deficit. It actually turned into a pretty nice revenue source, this terrorist policy. And now I actually don't know whether they're looking into new solutions on how to terrorist other countries but terrify other countries. But for now it's crystal clear that they have to pay back more than they take in, which leaves a nasty hole in the budget for the coming month or two. And the last time they updated their issuance profile was I think it was the 3rd of May. And we've only had negative surprises since. So it basically means that they have to use the liquidity that they have at hand already on hand already. Right. They have this TGA at the Federal Reserve currently running below projections as a consequence of this. And I think we'll see a large drawdown on this account over the next four to six weeks as a consequence of these tariffs paybacks. And that essentially means that private banks will be on the receiving end of this liquidity. And do note on the very bottom of this panel, we probably have the metric that matters the most, a live gauge of the price of of leverage. So it's the spread between SOFA rates and effective Fed funds rates. And we're pricing very negative now, meaning that the sulfur rate is well below the effective Fed funds rate. And that typically happens when there's an abundance of dollars. So basically banks are readily available in terms of providing you with balance sheet capacity. To lever up trades and treasuries, mortgages, whatever. And that's a big part of what's ongoing right now because we've obviously seen a spike in leverage through this rally. And given how it's priced right now, I would assume that the spike in leverage continues. A spike in leverage can be two sided basically. You can also use leverage to short things. And we've certainly seen that, for example, in software, which is probably one of the reasons why software is now flying because we essentially have a short squeeze there. And that probably leads us to the final question. Why aren't we seeing a squeeze in Bitcoin now that software is improving? Right. I think that's a big puzzle. Yeah, Please bring up this chart. I mean it's getting personal now. It kind of seems like Bitcoin is basically the only risk asset that is not really participating. Right. Which is odd. And I've seen some pundits rolling their portfolio into crypto. Now. I, you know, for transparency I actually sold a bit of ETH last week to pay taxes. So I've done the opposite. And with my short attention span, I simply, you know, I, I, I'm very bad at waiting, if you know what I mean. So we've seen everything else.
- [21:20]
Mikael Rusmal
It's the same part as the robotic. Can you wait three, four years for this? Nobody has patience for that in this, in this market, market, at this part of the rally. And I mean usually when the level of greed, the level of returns people are getting in all sorts of trades is this high. We should be talking doge, we should be talking fat coin, but we're not. So there has been sort of a vibe shift and the question is if it can still come with the liquidity and the ISM at 5,400. It should be.
- [21:51]
Andreas Denel
Yeah, let me put it like this. It would be odd if Bitcoin was the only risk asset that wouldn't enjoy its moment in the sun during this cycle. So I guess it could be very violent once, once the momentum returns. But let's see, I'm still patiently watching the price action here. I haven't really added to anything in that space. I'm under allocated to crypto versus what I've typically been. That's the honest answer here, simply since we see so many good return cases elsewhere and yeah, I guess it's a sign of the times in a way that, I mean we know that both from flow evidence but also from anecdotal evidence that some crypto investors have obviously shifted focus to AI for a lot of reasons. And yeah, we simply need some trigger to get the price momentum back, I guess.
- [22:43]
Mikael Rusmal
Okay, Andreas, I promised people three banger trades for June. I can gauge from what you're telling me, it's not eth. It's not Bitcoin. What do you mean?
- [22:54]
Andreas Denel
I honestly have to.
- [22:56]
Mikael Rusmal
No, it doesn't have to be specific names. People can watch our portfolio from that. But which sectors are you looking for if we limit it to June?
- [23:04]
Andreas Denel
This software squeeze is getting pretty violent now and the market is caught very, very short in this trade, to be specific. I like a few names within the security space. We've doubled down on those during that SAS apocalypse. We've made tremendous returns there and stay heavily allocated to security software. So that is a very good case for June, I think. On top of that, I think the surprise element here. Look at Dell's numbers last week.
- [23:41]
Video Narrator
Wow.
- [23:41]
Andreas Denel
Right. Mostly an AI service, but we're also starting to see the spillovers to some of the end consumer products. We also saw HP Enterprise making a partnership with Nvidia now on a new production line, which is very interesting. So another name in that space that looks compelling. So computer server makers.
- [24:06]
Mikael Rusmal
Wow.
- [24:07]
Andreas Denel
I don't think we've even started in that trade. We, we entered that trade. Yeah. Was it, correct me if I'm wrong. Probably three or four weeks ago, Mickel. And you know, Dell is trading like a meme coin. I, I absolutely.
- [24:20]
Mikael Rusmal
I mean, it's the ultimate boom,
- [24:23]
I
- [24:23]
have to say, A company like Dell, the ultimate. You had all these memes of the. Was it the JP Morgan offices being stuffed with the dystopian everything. It shouldn't be doing good. And it's, it's doing, I mean, peak meme coin material here. It's, it's incredible, Andreas, what we're seeing.
- [24:41]
Andreas Denel
Software and these end consumer producers of servers, computers, et cetera. I think those are two good traits then. This is probably early days because we had this Wall Street Journal article last week around some of the drone companies potentially receiving funding in return for equity stakes. And the most important factor right now in equity markets is momentum. And we've seen a reversal of the momentum in a couple of these high beta names in drones. So I, I'm actually tempted to say that it makes sense to add to some of these drone names. Of course, Unusual Machines is absolutely through the roof since they have Donnie Jr. On the board. Right. But yeah, I don't want to comment on that, but, but anyway, I should refrain from doing so because I don't think I can contain myself if I start commenting on it. But having said that, it looks like there is a potential confirmation case here, if you know what I mean, through June because for now we only had that Wall street. We have that Wall Street Journal story about the negotiations, but we haven't seen the confirmation. And once the confirmation of these packages arrived for quantum companies a few weeks ago, we had another massive spike there. Right. So it could be, you know, a specific confirmation case for drones in June.
- [26:10]
Mikael Rusmal
Yeah, absolutely. The one problem for drones is that it is still a military thing. It is still related to the war and if we get one or two wars ended, it should be negative also for military drones and not enough to make it a bad case, in my opinion. I'm very, very long. I believe this is going to be an incredible case for coming years. But just one thing to consider very specifically for June. But, but obviously the country is getting, getting picked for, for US Equity takeover. US Equity acquisitions. It's going to be an incredible trade and I have to say for, for. For the wrong reasons, use unusual machines. Looks, looks really, really interesting there, Andreas.
- [26:49]
Andreas Denel
But me, let me mention one thing before we conclude the show here. Have you noticed how Claude has started recommending going long service now? Quite a few people have just asked Claude to come up with portfolio tips on a running basis and I don't think they've necessarily prompted it. So tell me what to buy on a running basis and refresh it once a day, something like that. I've seen quite a few screenshots of it suggesting ServiceNow, obviously probably on the back of Trump buying into the stock.
- [27:29]
Video Narrator
Right.
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Andreas Denel
But it's been on an absolute tear since. And it's funny because I don't think there's a more obvious cannibalization case than exactly ServiceNow from the launch of Claude. Right. And now Claude is recommending it as the best buy out there, which is peak meta in a sense or peak the circular era. I don't know. I don't know what to say about it. But there's this huge short squeeze ongoing in service now. So that could also be another fun play for June. I don't know.
- [28:03]
Mikael Rusmal
But yeah, you know, Andres, at some point we're gonna have to. You're gonna dislike this. At some point we're gonna have to try and estimate how much money is being managed on people's own accounts directly by recommendations from Claude and how much to. To what extent are they getting the same recommendations. How much is this? Yeah, yeah, that's, you know,
- [28:24]
Andreas Denel
I'm an investor and fund manager first and foremost and. But also an analyst.
- [28:29]
Mikael Rusmal
Right.
- [28:29]
Andreas Denel
So I actually think it's something that we need to consider on an ongoing basis going forward because it adds to the momentum factor.
- [28:38]
Mikael Rusmal
Exactly.
- [28:39]
Andreas Denel
That. That, you know, everybody's just piling on the same traits because they're told so by Claude and Gemini and whatever. And it gives you opportunities both as an investor in value names and in momentum names because obviously you'll get some moves that will be three, four standard deviations off the chart, which will provide you with tremendous opportunities to fade if you can find the right timing to do so. But there is also plenty of money to be made in the momentum trade in the meantime. Right. So you simply have to maneuver both the value and the momentum factor here.
- [29:19]
Mikael Rusmal
Absolutely, Andreas. Okay, guys, that's all we had for you this week. Remember to if you're a pro tier subscriber at relation to tune into Andreas, the State of the Union speak here on our show here on Wednesday. Another eventful week. We'll be back next Monday with another macro update, hopefully with even better news on Iran and still ongoing rally at that time. Thanks to you, Andreas, for joining. Thanks to everyone for tuning in. We'll be back next week.