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- [00:00]
A
Sam hello out there.
- [00:28]
B
Welcome to another edition of Macro Mondays. My name is Miklo Rosenwald. I'm your usual host and as usual I'm joined by you, Andreas. Welcome to the show.
- [00:36]
A
Thanks very much. Mikkel. What a glorious day to be sending live. I mean, it looks great when you're looking at screens at the moment.
- [00:45]
B
Yeah, lots of greens out there. It's been a great weekend. Great last week or at least towards the end of it for crypto. Lots of great stuff to talk about. Address. We're going to talk a little bit about bitcoin, talk about some of the numbers coming out of the US economy, some of the numbers not coming out of the US Economy. Top Japan, taking a listen question or two. So do keep up the list of questions. We're trying to get into a bit of an improved rhythm of taking those up on the show, but if not, we'll bring them on next time. So no problem there. Remember, this is sneak peek into all the research and all the analysis that we publish on Real Vision with the pro tier. We'll get back to a little bit more sneak peeks of that, but just our usual disclaimer that even though we try to be as actionable, as accurate as possible, our trade suggestions might be.
- [01:35]
A
Summertime, it may be good, sometimes may be shit.
- [01:39]
B
And Andreas, I especially wanted to do the disclaimer this week because it's always good to have the disclaimer when you are doing more good than shit. So let's just bring up the chart on our portfolio return here. Andreas, you run a portfolio on Real Vision for the approach here. It's been doing quite okay. We're up close to 75% on the year. Satisfied so far.
- [02:05]
A
Well, I guess unless you're like a complete crypto degenerate, I think this is satisfying for the year in many ways. Of course, we've been on a roll since say, late summer this year. Some of the thematics that we've been highlighting have performed incredibly well, not least within the drone technology space, also within AI and related bets, also a couple of the bets that we took on of the weak labor market reports that we've received. And some of those trends are actually pretty puzzling to a lot of economists out there. And I generally think that we've seen a year of almost extreme humiliation of the economists as a class or working class, if you know what I mean. They've really struggled to keep up pace with everything that's been ongoing. And they've also struggled to understand some of the regime shifts that we've seen especially since liberation. So you need to stay on top of all of the thematics. You need to stay on top of all of the political themes as well, because a lot of the returns in this portfolio have been driven by stuff coming out of the Trump administration, stuff coming out of the European Commission, stuff coming out of the Japanese administration, et cetera. So it's a bit of a mixed bag of goodies that we've made money on, but boy, it's been a ride.
- [03:27]
B
Yeah, returns always count. Andreas we'll get back to the to the portfolio a little bit later. We did some something of reshuffle by towards the end of last week to get the full picture of that. All the stock names, all the suggestions go to Real Vision Pro for more on that. We'll get back to that a little later. Andreas, I want to get on to the laugh of the week and it might be a little bit cynical to call this the laugh of the week. I'm not sure if this is legit, but you sent me this address last week that a Washington contractor allegedly hired undocumented worker for construction jobs job and then called on ICE to avoid paying them. I'm not sure if this is legit in there, Andreas, but this probably goes to show you that things are changing in the American job market and the entire dynamics of that. We are absent the most recent job numbers. We are getting some indications, but the job market is changing in the US I don't know whether we could pull this off in Europe. Andreas.
- [04:27]
A
No, we probably couldn't for a lot of reasons, especially since we will kind of limit ourselves in many ways in terms of the legislative backdrop of doing stuff like this. Calling it the laugh of the week is probably a bit cynical. Yes. The point is, though incredibly relevant from a macro perspective since we obviously received the first month on month negative payroll print from the private payrolls ADP job number last Wednesday and interestingly, the market is just firing on all cylinders despite this weakness in the labor market. And I think we've been banging the drum on this for at least a quarter running also ahead of everyone else starting to talk about this topic. But when you do such, when you orchestrate such a dramatic change to the migration policy and when you by force shrink the labor force, as is currently the case, as we can see with this ICE effort here, we're talking about an economy that is probably currently in a mismatch between the supply and demand side for labor. We're talking about an economy that doesn't necessarily need to create a lot of jobs per month. We're talking probably less than 25k at this juncture a month to keep everything stable from an unemployment perspective. So sure. I mean you'll always have month on month volatility in hiring. And if we have slightly weaker than average month, we'll get below zero. Now you just need to get accustomed to that because given the shrinking labor force, given the migration reversal and all of that, it's just what's needed for the economy. You obviously cannot create a couple of hundred thousand jobs a month. If the labor force shrinks, that would swiftly lead you into trouble. So this is a very, very different labor market to the one that we had during the Biden era and one that has been misunderstood by many. And I think the overall conclusion here is that everyone's still too pessimistic on the broader CAPEX cycle because obviously you need to automate a lot of things when the labor force shrinks. You're kind of forced to. So this whole automation robotics CAPEX cycle is one that is just getting started in many ways. And I'm talking in a broader sense than just the AI data center push that we're obviously again seeing today with news coming out of OpenAI.
- [07:09]
B
Yeah, it's interesting how long this will remain sort of the main focal point of the Fed. So I know that's a very, very long term discussion, but at what point does job creation become less important than topics for them?
- [07:25]
A
Yeah, but I think they're, you know, to be honest, I think they're scared about this. It's part of the reason why they started cutting interest rates again. And you know, with the ADP job numbers last week, they certainly, certainly received more fuel for their current narrative around the labor market being, you know, at risk of getting out of balance. And I think the Federal Reserve will continue to cut interest rates into this environment since better safe than sorry is probably the key word here or the key words when you see such payrolls numbers coming out. You obviously cannot fully describe the potential for a negative spiral in the job market given what we see. And the Fed will just given its mandate to respond to that.
- [08:11]
B
But it seems like the reaction function is a little bit distorted because when they cut rates, companies invest all the money in data centers. They don't really create jobs from that. So it is, there are some different, some, some interesting dynamics to that long term address. Okay, a little bit of a shift in. We're receiving a lot of questions, a lot of speculation obviously online on where are we on the banana. Where are we in the cycle? I want to present you for with three hot takes from. From. From X this week and see if any of them make sense to you. I want to start with two estimations of where we are in the cycle and then an interesting bit of. So the first one is this one from Jamsy, he's called. He's calculated for that from all time low in 15 to all time high in 17 was 1064 days. 364 days from all time highs to low. So that should put US exactly today, the 6th of October 2025 should be the all time high. And then we're in for 1,000 days of now we're in for 364 days of a slight turn. Also. Is there anything to this address? You live in a simulation as he suggests.
- [09:22]
A
Miguel. I'll have to run early because I have to close my portfolio. As far as I can see, that's it. I haven't seen this, to be honest. So. Well, wow. I guess we're living the matrix if this is true. Right, we just need Laurence Fishburne to pop on the screens in a moment then, I guess. Are you taking the green little red pill nickel? That's the question now.
- [09:45]
B
Okay, just on a slightly more serious note, we're all almost halfway into the show, so. Time for me not to post meme stuff here. Jonah, here. I'm not selling bitcoin until the country's bubble become as big as the retail bubble is today. The point being here that the countries and governments account for less than 2 1/2% of Bitcoin ownership, at least on paper. Here, do you buy this? How much tailwind is there still in governments buying up bitcoin? Or is it too early for that?
- [10:22]
A
This is a really good question because if you look at the gold buying currently, we're talking about a lot of institutions from the global south buying into the gold rally. And we're talking about a much less clear participants from the retail crowd. So there's this vast divergence between gold and bitcoin in terms of who's buying, even though they kind of go hand in hand in this cycle. When you look at the correlations to, to everything that's been ongoing in macro. So I think this is a valid point. What I struggle with is first of all, the Western participation in this. I still think it's very, very early days in this and I'm not even sure that it will be in this cycle that we see the true Western governmental participation in this. We've obviously seen participation from non western governments mostly. While if you look at the bitcoin reserve in the U.S. for example, we're mostly, if not full, talking about bitcoins that have been confiscated through various events over time. So I think there's some merit to this. I think it's a cycle. Too early to really talk about true adoption, especially from the western governments here.
- [11:35]
B
Okay, interesting. This is my absolute favorite. We've been talking about this all day. It's sort of like we always love these bell curve of IQ where the low and high end of the IQ curve are thinking the same way. This is kind of that some way. Even though he calls himself average crypto guy. So his point is, if I put in a thousand bitcoins today, $1,000 into bitcoin today, bitcoin goes to 200. Huge scenario. I only make $600. Okay. Nobody's going to get rich. And my first reaction was that this is completely ludicrous logic. But, you know, it's, it's kind of true. I mean, it is true. Yeah, it is true. It, it's obviously preposterous that you would get rich from investing $1,000, but still, it's what people are somehow expecting out of bitcoin. And it's all you, the people listening to this show knows this, but it's, it's, it's just an interesting dynamic that, that you have a lot of people out there thinking like this.
- [12:30]
A
Yeah. But if, if you want to get rich out of $1,000, you need to buy some spotcoin anus coin. I don't know. But, and I mean, it's not going to happen from bitcoin overnight. Right. We're, we're too far into the, you know, cycle of adoption here to really get those kind of return profiles in bitcoin overnight. So I would rather say that bitcoin is a very, very decent investment if you're trying to secure your true purchasing power over time in a way that gold has been for decades. If you want to get rich fast, you simply need a better lottery ticket than bitcoin here.
- [13:18]
B
Yeah, exactly. And my point is simply that if this logic is spreading, if it gets out there, then we're heading into a stronger old season, essentially, because that is where you need to look. Just a little bit of a psychological point here, Andreas. So anyway, we're still at a good point in the cycle. You're not buying the 6th of October doomsday scenario.
- [13:45]
A
So what I dislike about such a study, even though it looked compelling with These exact mirror images of earlier cycles is that each cycle is different. So this is obviously not orchestrated by Rothschild or whatever entity driving these cycles. It's driven by the macro landscape. And I think we got another week of evidence last week of that. The macrocycle is not necessarily firing on all cylinders. Yet we're starting to see emerging signs of green shoots in the cyclical picture, especially also outside of the us, which is very, very interesting. While, for example, the ISM manufacturing still prints roughly around 50, which is typically not where you see a cycle peak. The cycle peak in 21 happened when. When ISM got above 60. So the simple study would suggest that the cycle is much longer this time and slower than what we saw in 21. To take that example.
- [14:52]
B
Your article this morning, Andreas Stent of Signals, focuses heavily on Japan getting a new prime minister. Take Ichi, I think the name is. Sorry if I'm butchering that. No. Expert in the Japanese language, you had some interesting point on Japan and maybe a shift onto more of a fiscal dominance policy. I'll bring up the first chart here on private money creation. What are you seeing out of Japan address and how this moving market.
- [15:22]
A
I'm not an expert in Japanese politics either, but from what I can gather from both the local and global coverage of this new likely prime minister in Japan, I should say it's still likely. I think it's the 16th of October that we'll get confirmation. But she's at least rhetorically, a big fan of market Thatcher. We've heard that before, obviously from. From all the female prime ministers across the globe. If you look at her policy mix. I. I'm not really sure I get the Thatcher analogy, because we're talking about a big spender, we're talking about a candidate willing to put pressure on the central bank. We're talking about a candidate that will move the fiscal budget in a populist direction. And I mean that mostly in a positive way. So I think she lines up or aligns very well with the trend that we've seen in the us, the trend that we've seen in Italy and the trend, it's actually more or less a global trend by now. We're just waiting for the elections, for example, in France and elsewhere, to get us there. But the trend is the same, more or less, no matter whether you look to Asia, Europe or the US Right now that we're moving rightwards, we're moving towards the fiscal budget being used actively, we're moving towards the central bank losing control of the situation in many Ways that they're not able to control the narrative to the extent that they were in the 2010s. So I think it's safe to say that everything that we see globally right now in the macro space is very aligned across continent. It's very uniform direction of travel, which for once makes me kind of upbeat that we'll see returns in every region. We've seen those scattered returns for a long while, but we're currently seeing returns in Asia, we're seeing returns in Europe, we're seeing returns in the US it's almost too good to be true. You cannot really make any mistakes. At least you'll get some positive returns. And that's a really, really interesting dynamic, which reminds me a lot about 2005 to 2007. It's the last time I can recall such a uniform shift and such a uniform credit creation globally. And what's interesting with this chart of mine on the screens currently is that over the past two years or three years, we've obviously seen bank of Japan stepping away from their intervention. It's not that they're not involved, but they're involved to a much lesser extent than they were just a handful of quarters ago. And the typical takeaway from most economists, which would probably have been, okay, this is going to slow down things because bank of Japan is now no longer actively intervening and buying up ETFs and what have you. But instead we've actually gotten a very pro cyclical environment out of this because the private market in Japan has been allowed to do the heavy lifting again. And I actually think that's a positive, especially after years of, you know, bizarre uber intervention in the Japanese yield curve. And I think the simple reason is that when you allow the yield curve to function again, so long term bond yields rise versus short term bond yields, it allows the typical private credit creation process to restart. And that's basically what we've seen in Japan. We're seeing the private system creating money again after a decade of zero money creation by private commercial banks in Japan. And I think this is a scenario that you should prefer relative to the central bank just creating the money, because a central bank creating money will just channel the money in one direction, basically, while a private commercial banking system that is once again lending out, riding the carry on a steeper yield curve will send money in, if not all directions, then in the directions that matter. So I think the capital allocation will be better than it was during the past decade. And it's apparently good for Japan. I mean, Nikkei was up 5% this morning. Jesus Christ.
- [19:34]
B
The movements there. Andreas, very interesting. I just want to touch on, get back a little bit to our portfolio update from this Friday. Andreas. We don't always remember to show our regime model us, but this is obviously a lot of the backdrop of what caused our changes in the portfolio as well later this week. Andreas, obviously, if you don't remember our regime models, this is our proprietary regime model that calculates the probability of rising growth, inflation and liquidity. And we're seeing a huge drop off in the probability of inflation actually rising from very high levels in rest. Why do you think this is? I would probably have expected somewhat of the opposite of late.
- [20:22]
A
Yeah. So remember this is always calculated relative to where we are both in forward pricing terms and in spot terms and inflation. So the current expectation is that we'll print it around say 3.5% soon in the US inflation number, which is I guess a reasonable expectation. But I've always said set that the forward looking expectations for inflation since Liberation Day were too high. And I think that's finally what's showing up in this model. I mean, we've been waiting and waiting and waiting for this big inflation spike. It is slowly but surely showing up, but at a very, it's almost at a snail pace compared to what was expected.
- [21:03]
B
It's not accelerating. That's what this chart tells us.
- [21:06]
A
Exactly. And I think the underlying dynamic here is that take the example of many of the metals that have been targeted with tariffs. Take copper as a prime example of that. If you look at the statistics on the copper warehouse in the US we're talking about an explosion that is completely out of proportion with anything I've ever seen before. So of course it's, it was not like executives were sleeping under a rock during this entire process. Up until Liberation Day and the subsequent tariffs on metals, you obviously ensured that your supply chain was moved forward in time. You insured to fill up your warehouses ahead of time. So we have a big inventory of copper, to take that example in the US Imported without duties. And when you have such an anomaly, it probably takes upwards of a year to massage this effect through the system. Because one thing is if you can work your way through a typical inventory cycle, but we're talking about an inventory cycle that is now much longer since you had this material front running. We also saw that in the GDP data. Right. With imports spiking ahead of the tariffs implementation. So the point here is that tariffs take time and they will be massaged in very slowly but surely into 2026. And therefore you don't get that immediate spike. You get that spike massaged over time. And I think that's where the market has gotten all of this wrong.
- [22:57]
B
Okay, Joyce, expanding just on the copper case, because that is one of the trends that we've implemented into the portfolio. Last week, this chart really, really, really stuck with me. A shift in industrial production in China away from sort of the classical construction cement over to more of an expansion of the electrical grid, all that, which is very much copper. So what makes up this change? Why are we seeing this, and how did you translate this into an investment thesis?
- [23:27]
A
Well, I think the first, first answer here is ebs, so that's a big part of it. I'm personally surprised by the magnitude of this shift in China. They've really made a swift change to their vehicle strategy overall. They're also exporting a lot of EVs. They've managed to export them also to markets that were ahead of them a handful of years ago. On this topic, we see a lot of Chinese EVs in Europe now, which again is a major surprise to me. But it's not really. It's not really slowing down. Rather the opposite. And, you know, a piece of anecdotal evidence. I spent all of Sunday looking at EVs, and I, and I actually think they make a good. They do a good job, the Chinese EV makers. I'll probably not end up buying one, but it's just because I'm a stubborn bastard in that sense. You know, I want to drive a German car or a Range Rover. Right. But they cannot even create an ev. That's, by the way, hilarious. But.
- [24:30]
B
But Germans can't either. Sorry, no.
- [24:33]
A
But at least they sell some. But. So that's the first part of this big push towards EVs and their export markets. I think they saw it coming that they would lose control of the export market in the us. So they've now shifted into these, for example, EV supply chains to also cater for the European market. Then you look at solar, obviously. I don't know why I included wind, because that's actually not particularly important in the light blue here. Solar is the big addition to this from, say, 2023, late and onwards. And that's obviously an AI exercise. Yes. Nothing more, nothing less. It's all, it's all AI. It's the only feasible way that you can, you know, grow the operational grid size in a pace that's needed. This is a trend that will come to the us. It's a trend that will come to Europe. It's even a trend that will come to our neck of the woods where we like wind a lot because it's needed. Yeah.
- [25:33]
B
And it's one of the most fundamental super trends right now. Andreas. And we've looked into that on the portfolio as well that it seems like for AI I don't know who came up with that quote that right now the bottleneck, it's not GPUs as we've talked about for several years. It's electricity. Something as simple as that is energy. And that is going to be the bottleneck. And we are seeing an acceleration in the global electricity demand which is incredible the level we're seeing that at.
- [26:04]
A
So Nigel, I saw a state by state statistics on the data center usage of the total electricity consumption state by state in the US and we have a couple of states with a 40% data center usage of the entire electricity consumption on a daily basis. That's absolutely bizarre. Are we also have states, you know, with much less. But. But some of those states obviously have to do something about that.
- [26:32]
B
Absolutely. It's. It's also leading us to a little bit of a shift in our nuclear positioning. But you'll have to to to go check the article out for that. A lot of points there. Any final points on the portfolio address or just put on the the return charts chart as well for your enjoyment.
- [26:49]
A
So you know the only thing I, I'm thinking about at the moment, we obviously have this typical tremendous seasonality here in the fourth quarter. I don't necessarily buy into seasonality just per se. I want the fundamental macro picture to back that up. And I think we're starting to see green shoots in the manufacturing cycle. Orders to inventories are pointing towards Q4 uptick in activity. Our now costs are starting to look brighter both on growth but also with this less scary inflation picture than what is being penciled in by forward swaps. And when inflation is coming down relative to expectations and growth is coming up relative to expectations, it's hard to ask for more. So in that sense I think it's a good idea to remain fully invested and I think There's a decent Q4 ahead of us. But the only thing that I always warn you about when I start start bracking with my results, it's typically something you need to take note of.
- [27:53]
B
That's a fair point. Address fair point. It's often like that. We all know that. Anyway, thanks to you for coming in.
- [28:00]
A
I haven't bought a Lambo yet. No, not yet. And I didn't even look at a lamb.
- [28:07]
B
Very good sign for you, Andres, because.
- [28:09]
A
Yeah, I'm the kind of guy that could buy a Lambo, let me put it like that. And I'm not really looking into it at the moment, so I think that's maybe telling.
- [28:20]
B
Horrible decision to drive around central Copenhagen and Lamborghini. I'd say definitely not Lamborghini territory. This okay. Andreas, thank you for joining today. You will be hearing more from you this Wednesday. Macro meets micro. Great show. Sign up for Real Vision for that. A couple of other great interviews and shows this week. And then we're very much looking forward to the upcoming launch of Real Vision 3.0. I've seen some sneak peeks into that. Aiding with the beta process a little bit. Looking very, very exciting. So keep your eyes out for that, Mikkel.
- [28:53]
A
And you know, Web3, forget about that. It's RV3. That's where you see the progress.
- [29:01]
B
That's a good one. That's a good one. That's for the marketing team at rv. That's a free one for you right there. Great stuff. Thanks for this, Andreas. We'll be back next week. Thank you all of you for joining. See you around.
- [29:12]
A
It.