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Macro Mondays. Level up your week. Oh yeah.
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Hello out there. Welcome to Real Vision. Welcome to Macro Mondays. My name is Middle Usmal. I'm joined as usual by my co host Andreas Steno and we have a jam packed show for you today. Once more we are looking back at the Trump XI summits. We're looking a little bit at interest rates and then we're obviously looking at the inflation reports we got last week. And do we need to worry, is this the end of the good times? We'll take a look at it and of course we'll cover the latest dose of Iran opium that we just got over the morning here. So lots of stuff to talk about. Andreas, how are you feeling? We had an extended weekend in Denmark. We are Europers after all and we're, we're entering the part of the year where we have a public holidays left, right and center. So. So how was your weekend address?
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Well, you're absolutely right. You should expect us to be off three to four days a week on average from now and until the end of June. So I guess it could be worse.
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End of August. Really?
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Yeah, sure, yeah, we're off all of July so I mean I just took that for granted.
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Absolutely. Now even though we have a lot of public holidays, we still have lots of great content here in Real Vision. We do have collaborators outside of Europe, thankfully both Australia and the States. So remember on Wednesday, that's the big one. This week on 4pm Eastern for all pro members, we have a roundtable discussion. So that's going to be you and Andreas, Jamie and Raul talking. Everything macro, crypto, AI, just shooting shit. So it's going to be really, really fun. Really looking forward to that show, getting all the, all the good guys together. So really looking forward to that one. Remember this is our free weekly sneak peek into the world of macro and the publications that we publish on Real Vision. To get full access you need pro access for Real Vision that gives you access to our three weekly articles that includes the Stenos signals. Let us Andreas flagship editorial, my geopolitical piece the Drill and then our Friday portfolio update where we take a look at what's happened on the thematics that we cover in our Macro model portfolio at Real Vision. So do check out the approach here for more that@realvision.com and as as usual, a little reminder here, Andreas. We are try to be as actionable and concrete as possible but our recommendations
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might be sometimes may be good, sometimes may be shit.
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That's the way it is Andres. And speaking of sometimes may Be good sometimes maybe shit. I'm an avid, I don't know if it's right to say follower, but at least observer of Andrew Tate. I'm very, very fascinated by the following he has addressed and he has obviously been a very, very big bitcoin guy. He has dipped his toes in finance once in a while now. He has essentially killed our program, I'm afraid. Andreas, now what your take on it. He published his life hack. Since the US government is now selling 30 year bonds at 5%, you should simply take 50 million in cash and just buy bonds that will pay you two and a half million a year for zero work. $208,000 a month and that's enough to cover basic expenses like a security team and cigar. I don't know what your budget is. Monthly budget is for cigars and security team address. That's probably one of the good things of not living in Romania. But what you take here is this the life hack we all waited for.
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A
Well, I guess this classic example of the old discussion how to get rich, right? The easiest way to get rich is to inherit the money or get 50 million in gas from out of the blue apparently here, right. Because of course it's easy to earn money if you have 50 million. So I, I don't really see the hack here to be honest. But no, it could be seen as a sentiment indicator related to long bond yields in a sense, right. That all of a sudden Andrew Tate is now aware that the 30 year treasury yield is above 5, which is the first time for a while. Right. So we had a lot of focus on that last week, right. Bond deals, they've trended in a nasty direction. The big question is whether it's an issue.
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And that's the point address to, to, to get serious about this when even entertained is posting about bond yields being high. Was that what caused the, the sell off we saw on Friday and into Monday here or, or how much impact does that have on investors in European.
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A
Well, you know the trillion dollar question right now is whether long bond yields carried the same significance for risk assets as they've typically had for decades. And I've spent a lot of time digesting that topic over the course of the weekend since we had this very nasty price action in bonds towards the end of last week. I'd like to start with just a very simple observation on page 10M because, and I've, I've actually had this dialogue with, with quite a few of our professional investor counterparts but also with, you know, various accounts on X, various People in my inbox, et cetera. So is it fair to assume that all of the conclusions that we've typically learned from the yield curve between say 1980 until 2020 still hold now that we have a very different yield environment? I think the simple answer to that question is no, that you cannot just assume that all of the lessons that we learned over the past four decades still hold true now that the overall regime is pointing in the other direction for bond yields. And to take one but very important recent example of it on page 11, we had the so called inverted yield Curve Back in 2021, 2022, we had inflation spike. Central banks started hiking interest rates aggressively, so they brought short term yields above long term yields. And historically, once we've seen the so called on inversion of the yield curve, where short term bond yields drop relative to long term bond yields, it has been sort of a precursor of something nasty. We've typically seen recessions, say a year, year and a half after that. A couple of good examples of it. Right after year 2000, just ahead of the great financial crisis, we had similar uninversions of the yield curve. Those are the red vertical lines here in the chart. And we had nasty developments in markets, we had nasty developments in the economy after that. And I remember how everyone called for the same kind of development back in 2022 into 2023, where we had the sun inversion, stating that okay, now we have 12, 18 months left and then the US economy will been ruins, basically none of it happened. So this otherwise very strong hit ratio signal of the U curve simply didn't materialize. And maybe that's a very strong hint that you cannot just conclude that everything we've learned about how the yield curve impacts various assets, how the yield curve impacts the economy, is the same as it was during those four decades of falling bond yields on a trend basis. Now that we, as I probably have increasing bond yields on a trend basis, maybe those conclusions do not hold anymore. And currently we have a tremendous empirical study of this in Japan. We've obviously seen long bond yields going from close to zero to more than 3% in Japan. And it's probably been the best era for Nikkei in decades, despite long bond deals going up and up and up and up and up and up. So why is that? Could it be that, you know, allowing yield curve to re steepen is a kind of normalization of the price discovery that is actually positive for markets? I hold sympathy for that thesis and I have a load of evidence of why that could be the case. In my editorial today, very interesting stuff.
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So check that out and read why this may be not the canary in the coal mine address, but if this isn't the signal we should be looking for, how about inflation? Andreas, we had a couple of quite hot prints last week. What do you make of them? And how worried should we be about inflation right now?
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You know, initially I, I found the trend to be pretty worrying especially since we also, I mean one thing was the hot consumer inflation report was it on Wednesday. And then we had the producer price inflation the day after which was probably even nastier. Typically you see, you know, the input cost inflation ahead of consumers actually feeling the heat. And we're starting to see some signs of inflation pressures that are pretty reminiscent of what happened in 21. We obviously should not discard that earlier today. And I actually think this carries a bit of significance because it's the first research house I've seen calling for this. Remember Ed Yardeni, he wrote that and I quote him. Now we expect the FOMC to signal a tightening bias at the June meeting of the Monetary Policy Setting committee followed by 25 basis points hike at the July meeting. We cannot rule out more rate hikes over the rest of the year. I don't think I've seen anyone else calling for rate hikes in the U.S. especially given the backdrop that we just got the official confirmation of Kevin Walsh taking the job last week. Right. So we now have an allegedly a dove in, in place in, in, in the chairman seat. And now a couple of research shops are starting to, you know, cite the risk of, of, of hikes coming up in, in two or three months from now. Would be quite the ironic backdrop if Kevin Walsh entered the FOMC just as a hiking cycle was starting. I, I, I, I don't agree with Yardeni here for a couple of reasons. I typically hate charts that strip out, you know, parts of the inflation basket. And you know it's very easy to always say, okay, if you leave this and this and this and this and this out inflation is nowhere to be seen.
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Yeah, no inflation used cars always good.
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But if you look at the consumer inflation report we got last week, I just think it's very, it's easy to isolate the issue because if you leave out energy and this by products seen in food, you basically don't have a lot of inflation in that report. Especially if you leave out shelter as well, the so called homeless basket. Right. Because shelter was sort of a technical one off last week. Remember that the shelter category is a, is a survey based inflation measure. So they, they survey a panel biannual. These are twice a year about their rent development. And back in October of 2025, they, they didn't have the staff at work due to the government shutdown, so they couldn't collect this survey. So in the inflation report from October of last year, everything related to shelter costs was basically zero because they didn't survey this panel. Therefore, six months later, April 2026, they surveyed them twice. In a sense, they doubled up the monthly contribution to account for that zero back in October. So that is obviously a technicality that led to more inflation than, than what is actually the case in April of 26. And therefore if you strip that out, if you leave that out of the equation, and if you leave energy out of the equation for obvious reasons related to the Strait of Hormuz, you could still find excuses to stay soft on interest rates, in my opinion. And I think Kevin Walsh will jump on that opportunity. Having said that, I still hold the view that we need to see a resolution in the Strait of Muse over the next couple of months to avoid interest rate hikes everywhere. And maybe that's the perfect bridge to allow you to talk a little bit about the opium that we actually got from the Iranian side for once today. Miko.
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Yeah, yeah, we're getting reports. Admittedly, I've been in recordings for the past two hours, so I haven't read it to deal on the details on most of it. But we do have reports that the US Side is looking to relieve some sanctions. We're hearing positive signs about negotiations, a new deal from being brokered by Pakistan. So address. The hope is that there is still a window to remedy the inflation situation by pulling out the driver of this inflation wave. Essentially. I still think there's a good chance we all accepted that last week was about the Trump XI meeting. Now Trump is, I mean, even though he's doing 50 things at once, he usually focuses on one thing per week. And now hopefully we're back to the Iran war to get that settled, because that is essentially what we're all looking for. So the big question here is obviously addressed. If we do get a settlement within a few weeks, will that sort of restart the rally? How much of an impact can that have?
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At least I kind of sense the same fear now from quite a few of the research houses and the PMs out there. As I sensed towards the middle of March or thereabout, I constantly hear this notion that, oh, the tech rally cannot really go on since we don't have A lot of positives to take away from the global economy. And, and while that is admittedly true on the surface, everything that we see in relation to the growth momentum, quite frankly across the board globally is much better than fear for now. The reason why we're staying alive, to put it that way, is that China is on a clear bias strike in oil markets. They import more than 5 million barrels a day less than what we typically see in the Chinese economy. On top of that, we obviously see these record export numbers and record fillings in U.S. harbors.
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So
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we certainly still have a couple of months left of decent momentum if the Chinese and US Cooperation on this topic is as solid as it is right now, and it's actually been a surprise to me and a big kudos to you to read the tea leaves right ahead of this Trump she meeting at least sort of from a big picture perspective, that war, if you allow me to call it that, the war between the US And China is basically off the table for now. And it seems like both parties agree on, at least on the major things related to the Strait of Hormuz and to the oil market overall. So when the biggest consumer of oil and the biggest producer of oil cooperates in that way, I actually think that we can keep the oil market in balance for longer than what most of the doomster energy pundits had expected, given everything that's ongoing in Iran. If you had told these energy pundits and energy hedge fund managers a couple of months ago that were still trading around 100, they would have told you no, absolute, no way, given that the straight of Hormuz is closed. But I don't really see a strong sense of urgency in the oil market to strike a deal here, which is admittedly slightly worrying. The good news is that, and I've actually had a a look at that earlier today, it seems like bond yields also matter a lot to the reaction function of the Trump administration. We've seen how Scott Besant has added pressure to alleviate some of the concerns surrounding Trump's very aggressive or hostile policymakes for markets. One spot yields have gotten extreme and we're probably at that point again where he'll start to sound the alarm internally. So I think we're seeing, at least from the bond yield side, we're starting to see the kind of pressure that is needed to force the US into making a deal as well.
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The question is, Andreas, because we're talking a little bit about Kevin Warsh. The whole idea was that when he entered office there would be this Huge political pressure to cut interest rates. We haven't really heard a lot about that, probably because Trump knows that he has essentially kill that plan with the Iran war, at least for now. But once he ends the Iran war, could that move back to center stage? Because the way I see it, it's the one thing he's lacking from this whole agenda. I mean, the terrorist war is more or less done. I don't know. He has some kind of truth with China. If he can end the Iran war, why shouldn't he move back to focus on cutting interest rates? Because that would be great ahead of the midterms. Middlebrick, do you think there's any chance of that?
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You know, at least as long as the decomposition of inflation looks the way it does, we can very easily go back to discussing rate cuts if we get a resolution to the straight of a moose. So take the example of last week. Again, if we get sequential negative contributions in nominal terms from energy, say month in and month out from August and until the midterms, then inflation will not really end up being a worry. Right? So it all depends on the straight of a move and whether you can get energy prices down in time for the midterms. I still think you can. And that is one of the. You know, I've had plenty of discussions on this exact topic with many of the energy experts out there. And what I think they struggle with is, you know, I fully understand that, for example, the oil market or any other commodity market for that sake is a physical market by the end of the day. Right. So you cannot really manipulate the, the dated market. Right. Because you obviously need the fuel. Right. So it's not like it's a paper market that you can manipulate to some extent, you can manipulate a futures market. But what I keep telling them is that as soon as the root cause of the initial worry is gone, the market will move on. And you know, the best example of that is late March, early April, where we got that move towards ceasefire in Iran. We certainly didn't have accelerating concerns around geopolitical risks sort of on a weekly basis. Instead, we had the opposite, right. It was kind of a de escalation without, of course, getting the ultimate deal in place. And that was also the exact point where we started to see energy worries recede. We started to see NASDAQ rebounding. And here we are, I don't know, 35% later with one of the fiercest rallies in modern history amidst the war, Right. So I cannot, I've lost count of the amount of insults I received when I said that the rate of change is what matters also in oil markets. But it does and the best empirical evidence of that has basically been the way the market has behaved over the past six to seven weeks.
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So Andres, a question here from user called or you were called cavi79 which sums things up very beautifully. That's sometimes, that's all very often the beauty of listening questions here. Good afternoon gents. Could you comment on whether it's time to take some profits in semiconductors? That's a good way of wrapping up your view on, on the immediate situation address
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I, let me put it like this. You know, obviously we shouldn't rule it out but I think it's an even more popular view to say that it's time to take profits in semiconductors than it is to belong semiconductors. So I, I don't think anyone is willing to say no to that question. Outside me everyone is saying that you should take profit in semiconductors but I, I have this very simple rule that I, I'm, I'm not going to take profit in that trade until I see an issue in the economic data from Korea because that's, that's essentially the best, you know, real time gauge you have of demand in, in the semiconductor space. And yeah will be very interesting to see the first 20 days of the month. It will be released I think on Wednesday morning. Right. The export data from the first 20 days of the month but we received the data from the first 10 days of the month which looked incredible. So I think it's as simple as that. If there's still an accelerating demand side on, on this then why. I don't know when this ends but I know what to watch and South Korean data is basically what I watch.
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Yeah, sometimes I think I'm blessed. I'm a political science major. The only economics I had at university was a course on supply and demand. That's it. It ended there. I had decent rates on that but the demand is there. That's, that's, that's all I understand. The demand is there, the demand is accelerating. We saw that in all the earnings reports. So I don't really see a reason for, for this unless you're, you're extremely short sighted and you, you, you need to buy a car this fall or whatever. I mean, yeah, an address that just leaves leaves us with a few minutes to, to open up a complete Pandora's box but one that I've been wanting to open for a while and that I'm very, very eager also to get the discussion going on on the Real Vision platform with all the great users in there. Because you sent me this. I don't know if you went to the congress.gov website and look, that's something I usually do look at the bill proposals from the U.S. senate Committee on Commerce, Science and Transportation. But Bernie Sanders, Bernard Sanders, the senator from Vermont, introduced a bill on Artificial Intelligence Data Center Moratorium act. And we're not going to go into the depths of depth of this address, but what you spotted exactly right, was that this is probably the first example of what we could call. It's probably harsh to call it anti AI legislation, but the beginnings of perhaps a more nuanced view Bernie Sanders would say on AI. He was also quoted for the opinion that Anthropic and OpenAI have stolen the knowledge of the masses and the population.
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In my opinion, that's the John Stewart argument as well. Right.
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In my opinion address. I've always said that if AI is working as we think it is, we're going to have unemployment, it might be good unemployment because we're all getting richer, we don't have to work. But it's still a political issue. It's a huge political issue. Potential already for 2028. So how much should you as an AI investor be.
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Be.
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Be on the lookout for. For this? And does this change the way you understand the stakes of the midterm elections as a, as an AI investor?
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Yeah, we should obviously look into the political side of this trade because at some trades related to infrastructure are incredibly sensitive to whether it's a red or a blue administration. Take the example of wind turbines. Right. This is actually the same kind of issue that faces solar parks, wind turbines, all those infrastructure projects. Because one thing is that Bernie Sanders has got sort of a more academic reason to, to put this bill forward. But it is ultimately, in my opinion, a response to the, you know, to the grassroots opposition against not having data centers in your backyard. We've seen, I think, more than 50 protests this year in the U.S. a directly related to data centers. It is a very classic not in my backyard issue. This with added layers here, because it's not like a wind turbine will make you jobless. Right. But to me, I still think the most tangible part of data centers is still this whole issue of the whole not in my backyard issue with high energy prices, the ramifications for the temperatures for the people living close to data centers and all of that more than this second order effect of how it impacts the job market, et cetera. I don't really think anyone's really on top of what's going to happen there yet?
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Not at all.
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Yeah. So we'll have to see. Ultimately, I don't think the Democrats will turn into anti data center politicians. The very reason being that I think you can rest assured that Dario Amate and his friends, they're starting to figure out who to pay ahead of the 2028 election to avoid this.
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Yeah, that's absolutely true and absolutely fair. I think we will see movements in the Democratic Party, but again, we'll, we'll get back to unpacking the entire, entire midterms. I think it's, it's being overplayed as an investor theme, to be perfectly honest. But we'll get back to that in later shows as well. Andreas, we're, we're past our time. Any final remarks for, for the listeners on how to behave this week?
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No. Maybe one final remark. You know, we've seen, I think, three themes wreaking havoc on the long end of the yield curve over the past seven days. One is the inflation wave. That's an obvious one given the energy crisis. The second is probably this whole worry that international investors will flee Western bond markets due to geopolitical risks, etc. That was again, sort of center of attention with the Trump XI meeting. But you can probably put that to bed for a while again with the truce that was found between the US And China. And then the final thing is probably these fiscal political worries currently mostly present in the UK with the risk of Keir Starmer having to step down. We've seen very volatile decision making and very volatile environments for politicians in many countries. Right. Where they struggle to even stay in power for their whole election period. And Keir Starmer is the latest example. We've seen it in France over and over. Right. So maybe that should be my final remark. I also think those risks are kind of overstated, especially in the UK now since the economy is actually on an accelerating path. And that is typically comforting for those in power. And therefore, if you overall get positive growth surprises during the second half of the year compared to consensus, it probably points in the direction of a more stable political second half of the year
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than what is priced in depending on inflation, I'd say because at the end of the day it's, it's not weak growth that kills governments, it's inflation. But we'll have to see. Andreas, a lot of hinges still on the, the situation in the horror moose that we are obviously covering on an ongoing basis. That's all we had for you this week, folks. Remember to tune in for our roundtable discussion with Raul and Jamie and everyone on Wednesday, 4pm Eastern, for real Vision Troll members. Thanks to all of you for tuning in. We'll be back next Monday.