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- [00:00]
A
Foreign.
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Welcome to another edition of Macro Mondays here at Real Vision. We're sending to you live from Copenhagen. My name is Migl Rosenwald and I'm joined as usual by you, Andreas. Welcome to the show.
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A
Thanks, Michael. I. I like how you always phrase it as life from Copenhagen when you're more than an hour or whatever it is. But.
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B
Yeah, in a global sense this is Copenhagen still, I would say. But you're absolutely right. It's been quite the day, quite the morning, Andreas. We're looking into quite a dip in crypto. We'll get back to what's actually going on, but lots of stuff to talk about. We'll try and gauge is this a dip? Is this the dip of the dip? What's the diamond hands move here? And then we'll look a little beyond that to some of the current macro trends. This is obviously our weekly show where we give you a free sneak peek into the all the analysis that we publish at Real Vision. You can get full access with the pro package at Real Vision but for this show you'll get a sneak peek and some trade ideas into what we do every week. We have a great week ahead of us at Real Vision. Even beyond this show. We're launching a couple of articles. You're publishing your weekly state of signals later today, Andreas have the drill coming out on on some rare earth on Wednesday. On Tuesday we have a great show with Roland David Mad for an exponentialist update on Wednesday you can look forward to Ash Bennington having a sit down with Maliha Bengali to discuss the outlook of outlook of the global economy after the FOMC meeting last week. Very interesting that one. And then on Thursday everything code update with Raul and Julian. So lots of stuff to look forward to, trade ideas, portfolio updates for towards the end of the week. Lots of stuff for for for you in at Real Vision. Remember, even though we try to be very specific, very data driven, very actionable that all our trade is here might.
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Be summertime, it's maybe good summertime, it's maybe shit.
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B
There we go, Andreas. And that might particularly be the case today, Andreas, because I am really struggling to figure out what the went on this morning I woke to eth going down 5%. Fat coin is down 15% almost. What the f is going on here, guys?
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A
First of all, Miguel, I think it was late Friday afternoon out time we hosted this monthly insider session for pro members of the Real Vision community. And I was donning a pinkish Miami Vice shirt and I said that could prove to be my famous last shirt. And essentially said that it was probably a sign of the times. In many ways we, we were on a tremendous run. Not necessarily in the coins you just mentioned, but across our macro portfolio. I still think we're up almost 60% by the, by the time of talking right now without any major drawdowns this year. So it's been in a tremendous rally. And then we wake up on a Monday morning with very nasty liquidity, almost a flash crash like price action. Was it 7am Our local time. So during the middle of the night for our US audience listening in. And I'll have to remind you that if we see flash crashes in the crypto space, it typically occurs late Sunday, early Monday. During that time span, it's rarely something to be overly concerned about, even though it looks terrible. So why is it possible to get such price dynamics during that session? Well, in my opinion, it's a liquidity issue. I'm a firm believer in 24,5 markets. So closed markets over the weekend for a range of reasons. In particular to avoid these liquidity air pockets. And you see them from time to time when something exogenous shocks the liquidity on some of these exchanges. For example, late Sunday, early Monday morning. And I think this is an example of that. I don't have any strong evidence of anything fundamental being behind this sell off. I think we're talking about a liquidity air pocket that eventually led to some sort of stop loss party flash crash. And the short version of what to do when you see that if you have cash to deploy, buy it. Because I don't think anything changed versus Friday. What could have changed since Friday was obviously this whole visa question in the US A lot of people worried about the macro ramifications of this new application fee for the H1B visas in the US and I'll get to it in a second. I've had a look at it this weekend. I'm not overly concerned about this being a macro event, but if it was a macro event, we would probably have seen it in other assets and outside of gold, doing okay?
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B
Ish.
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I mean, Nasdaq is up 19 index points live. I'm staring at the screens here. So it's a very isolated liquidity event in crypto and nothing too, you know, nothing that concerns me from a macro perspective, to be honest.
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You know, Andreas, personally, I've been awaiting a bank transfer to my Kraken account to this dip. Couldn't have come at a better time. I brought along this gif. This is me at the moment. I don't know if we can get it on the screen here. Here we go. I love this one. The diamond hands dribbling on the McDonald's. So anyway, address to sort of answer the initial question here. This could be a buying opportunity because the entire sort of Mac thesis macro thematic that we laid out on Friday for people watching that show still counts for for the remainder of the year. You said you are as bullish as you could be that that still holds up, right?
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Yeah, But I also got a few really good questions on Friday around. So the divergence that we've seen between crypto spot markets and some of the stocks involved in digital assets, for example, and we have a chart with the performance of the digital assets space in equities and it's actually been a pretty substantial rally through September and a rally that far exceeds what's been going on in the underlying assets. And that is to me, I have.
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It on the screen here.
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A
Yeah, and that's to me a sign of a divergence in the institutional versus the retail positioning in these themes. And as I said on Friday, I'm a little bit more concerned about the retail positioning than the institutional position. The institutional positioning is not upbeat still. We have a tiny long in nasdaq. We have a net short in US Equity indices overall. So we have a major short in Russell also slightly short, lean in industrials and so on and so forth. So I mean overall, sure we can get a flash crash in the liquidity air pocket. We can challenge some of the levered positions out there in the retail space. But if you look at the overall positioning from the larger institutional managers and they have pretty deep pockets, as you know, we're not talking about an excessive positioning by any means. And that's probably also why NASDAQ is flattish slightly up today while we see this liquidity turbulence in the crypto space.
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B
Interesting address. Should we move on to the visa issue? Because we've had quite a few questions on that. I saw this chart on the visa of the top occupations granted these H1B visas. You know, you neither of us are experts in this, Andreas. We don't employ these visas. But this seems to be very, very much a tech sector thing. People going to California first and foremost, lots of them going to Google, to Amazon, most of them from India and China into this. So, you know, politically speaking, I completely understand this. I think this is going to be very, very popular, to be frank. Cynically speaking, I think this is going to be a great asset for the Republicans going into the midterms because people in most of America, they don't really care. The San Francisco tech companies have access to cheap labor in their minds, or not cheap labor, but to labor from India and China. They believe these people are taking up space essentially in their country. That's the cynical view of it politically. But financially speaking, Andreas, how much of a worry should this be for the US Tech sector?
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Okay, so I actually think it's interesting that you found the top sponsor companies on the right hand, bottom corner there to Google Amazon with a couple of thousand a year. I haven't double checked those numbers, but it, you know, sounds feasible to me. So what do we actually know about this visa situation and whether it's a macro event? Well, first of all, there's an annual cap on new H1B visas. So the gap is 65,000 a year, which is, you know, relative to the monthly job creation in the U.S. pretty much peanuts. Right. We're talking five, six thousand jobs a month. Then you have an additional 20,000 for people already in possession of a master's degree or higher from the U.S. so people who've been there before. When you look at the total approvals of these visas, we're talking a number that is much larger than this annual cap because we talk about renewals and continuing employment petitions and so on and so forth. Right. So in 24, I think it was around 400K. And you know, remember to take these numbers with a pinch of salt, if not a truckload of salt, when we talk about employment statistics from the US at the moment. Right. I don't need to go into the weeds of why. The point here is that 65k is the annual cap for the additional H1B visas. I'm not sure that the US will struggle to meet that cap with the 100k application fee because that, you know, 65k additional visas, isn't it feasible that you can get the employer to pay 100k for each of those?
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That's it.
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I sincerely mean, I don't think it's a biggie. Maybe the number of applications would drop, but we're still talking about a demand that far exceeds the supply for these visas. So I simply think that you just bring these visas back in better balance with the supply side and it will of course be on the margin, a small revenue generator. Right. So if you really need an employee for India, you can pay 100k. You can do. I mean, if you really need the person.
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You heard the stories about Meta offering millions of dollars for individual, and I know that that's the Very, very top tier of developers obviously. But, but yeah, I mean to me this again signals that, that and probably only a Republican government could do this, could, could, could levy these, these fees on, on the top tech companies. And that's the same for if you review the entire terrorist discussion that way as well. It is essentially a sort of company tax or corporate tax here. And this is as well because I agree with you completely. If you're bringing in the right candidate, 100,000 is no problem. You can probably even amortize that over several years, shouldn't be a problem. So yeah, interesting. Very, very interesting.
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What we don't know here, which is why I think there's a caveat to this discussion on whether it could be more medium term, long term macro event. This H1B visa supply is not particularly crowded by the Max 7s. It is of course crowded by the Max 7s. But you also have a load of scale ups and startups included in that demand. And from my understanding, and I would love to hear the view from our audience out there. So please leave us comments, questions, et cetera on this question. This goes against the very DNA of the US economic engine that if you have a bright idea, you could bring in the right people and get that idea up and running. For example in California, for example in Texas, et cetera. And this is a roadblock in particular if you're only at the startup scale up phase of your company journey. Right. So I don't think this is an issue for Amazon. They couldn't care less probably, but it's a biggie. If you're running a scale up and you intended to run that out of Silicon Valley for example, then I think this is going to turn into an issue. So the whole notion that the American dream, you can go there, you can build, you can create and you can prosper basically if you have the right idea. I think that idea is getting challenged these years and this is just another example of it being challenged for a lot of political reasons. But I think over time that this will impact the level of entrepreneurship, the amount of startups scale ups per year in the US it has to impact that.
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What I'm looking at right now. Andres, to be frank, I don't have an answer to this yet. But who picks up these 100,000, 50,000, whatever it is, very, very talented, sometimes PhD level software developers. Do they stay in India and China to less extent. Do they go to the Middle east, to Europe? I don't think so. Where do these guys go? Because obviously you need the Ideas you need the infrastructure that's already there in San Francisco. But some countries are going to see a huge opportunity in this, in attracting these people. You could hope that, that, that, that some of the Indian tech clusters could, yeah, could, could retain these, these expertises. So. Absolutely. Very, very interesting. I want to move on a little bit to another topic also that we've had some questions on because before.
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Before.
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We get to another topic in address. And that's just a brief geopolitical topic here that I think is relevant for, for, especially for people invested in European markets. So we've had over the past one to two weeks a lot of instances of Russia violating Polish and Estonian airspace. What does that mean? Well, they, they sent some drones in over Poland. They were shut down. They sent some fighter jets in over Estonia that were shown off. This is nothing new. We've had this for, for, for many years in these countries, including our own. That, that's, that's very, very close to Russia. It's new that we're seeing drones and missiles over, over Polish territory, but it's, it's something that we see sometimes. So, so a couple of notes here. This coincided with the US Decision and the US Announcement to NATO that they're going to scale down their military support to the Baltic countries, Estonia, Lithuania and Latvia. The timing of this is obviously very peculiar, but it has nothing to do with this. So the US Decision to scale down support for these countries is not a response to these Russian aggressions. It just kind of happens at the same time. That's one point. The other point is that the intention of the US Scale down of military support is to get Europe to step up. That obviously plays into the good old European defense, especially digital and drone defense thematic that we've been playing for a long time, Andreas. But it also speaks into a little bit of a risk premia that you need to consider from now on within Europe because we've had these Russians provocations into European airspace, NATO airspace. The drones were shut down. The fighter jets weren't shut down. I think it was last year or two years ago Turkey shut down a Russian jet when it entered Turkish airspace and would leave. It's not unfeasible that that could happen. And that's going to send shockwaves through markets when we hear about a Russian jet being shut down over Finland or Sweden or Poland or Slovakia. So you need to consider that risk because that is something that could for a shorter period of time. I'm not saying this will lead to World War three, not at all but these incidents will continue to happen. And I think Europe is increasing its readiness to shoot down Russian jets whenever they do these provocations or at least fire at them. So just something to have in mind when you're investing in Europe that we are currently in sort of a provocational standoff with Russia. And you need to be aware of this, if you're heavily invested in European equities, that you could have a sudden 1 to 2% correction from an incident like that. So, so nothing major so far. Don't be too worried about the stories about Trump taking a passenger seat. That's always been the agenda that Europe needs to take the driver's seat in these areas. But this also means that Europe might have to shoot down a Russian fighter jet at some point. And that's, that's something to consider if you're heavily invested in German, French equities, etc. I don't know if you have any thoughts on this address. It was just a point I wanted to make here.
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In my opinion, it goes to show that this whole drone technology, air defense space is heavily under invested still. We have a couple of those names on our radar, one of them in our portfolio at the moment, one that I hold very dear myself and also put a lot of personal capital into. So yeah, it goes to show that we were talking 200 billion ish worth of investments in this space before 2030 on the back of a napkin. So, sure, these equities have seen material returns for the past 12, 18 months, but not something that's out of the ordinary given the investment backdrop and given the geopolitical backdrop.
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Absolutely. Andreas. Okay, I want to move on to a couple of listener questions because we had some, some interesting ones here. Andres. One that we get every week and obviously it's a user with. I don't know if that's a Lamborghini in his profile picture, but it probably is. When ism go up 50 and when peak is the question. Let's have it.
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Let me congratulate this geezer with having a Lamborghini before we go above 50. That's a pretty good starting point at least.
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What's he going to have after 50?
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Yeah, probably private jet. Right. But joking aside, this has been a very odd business cycle, if we can even talk about business cycle since 2020. Right. It's been so driven by politics. The ism manufacturing has been, you know, very sideways and in a weird range between 45 and a little bit more than 54. Yeah, the better half of a couple of Years. Right. If you look at the business cycle in the S&PMI, we're actually already there approaching the 55 handle. When you look at the ISM, as I've said quite a few times and I've written some pretty thorough explainers on it for the pro macro tier, we're talking about a very small survey sample. First of all, we're talking about a survey questionnaire where you have a lot of focus on international operations, cross border and given the current context of geopolitical affairs moving fast, tariffs up in the air, tariff levels being shifted and so on and so forth forth. I don't think it's unfair that the ISM sample is a little bit more downbeat than the S and P sample, which is bigger, much more domestically focused and a much better gauge of what is happening on ground in the us. So let me just underscore that the US is doing better than the ISM is currently showing. It's basically also the message you get from our outcast, but also from some of the big Federal Reserve banks when they now cast the economy that we're talking about a Q3 growth pace that is above potential. So I honestly think that it's a matter of time. So let me just state it. It will happen in Q4 when peak second half of next year.
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Very specific, Andreas. Great stuff. We get that every week. So I might have to bring it on again, but you more or less stick to your answer there. So. So kudos to that Andreas, but you don't always get that out there. Okay. The other question I brought in here, thanks a lot for all the guys asking out there. Also thanks to everyone posting about coin still in our feed. We won't go to be too deep into that right now, Andreas. We, we might have to if everything else fails. But a question from another guy named Andreas here. Finally going to invest in silver and gold miners explorers. Yeah, question mark. Yeah, that's always a question. You asked me to bring along this chart, Andreas. GDX US Equity VanEck Gold Miners ETF.
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Yeah, it's just an example of one ETF compiling the returns from a load of gold miners. And if you look at it, since New Year's we're probably talking about a return of a bit more than 100%. Right? So it has been a solid case this year. We're currently talking about a space that expands margins at a very rapid pace since this underlying spot price is obviously going to the boom currently. I honestly don't think I have said just even once this year that I consider it a bad idea to be invested in gold. I've said the exact opposite. We've had gold and gold miners in the portfolio four times since New Year's. I just checked it before going on air, but we don't have it right now. And my logic was that gold had a solid rebound on the back of these renewed tensions between Russia and Europe, on the back of signs that the US withdrawed a little bit from the eastern flank in, in, in Europe as well. But you know, we've typically seen, and we have seen very, seen that very much over the past six to eight weeks. We've typically seen how gold has responded to financial conditions in real time, while we've seen Bitcoin treasuries, Ethereum treasuries, so on and so forth, responding with the time lag. And that's why my best base case is still that Q4 is more of a quarter for the laggards. So everything that responds with a delay to financial conditions rather than gold. But I have absolutely nothing against gold miners and gold and I've said so all year.
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Absolutely addressed. Completely fair there. I just want to bring you one more chart, Andreas, and I don't know if there's specific questions of this. It just really, really hit me someone posted this. I know this is not news, but how the did we end up here? If you go back a few years, this was completely out of the question. We touched upon this much more in depth on Friday. But is the dollar ever bouncing back? What do you think is just in short term risk?
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Is it ever going to bounce back? You can thankfully never hold me accountable for that.
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For the answer to.
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I'm bearish on the dollar as I have been for most of the year. I think what we're seeing on the visas will prove to be another dollar negative. What we're seeing between the US and Russia, between the US and China, et cetera, we're talking about the very early innings of what is a tectonic shift in the geopolitical space. And obviously we're also talking about a tectonic shift geopolitically that will impact the value of the dollar as a reserve asset, as a mean of exchange, et cetera. If we're going down this path on a trend basis and therefore sure we've seen a weaker dollar this year, I guess between friends, 12, 13% weaker versus the euro, that's nothing on a trend basis. If, if we're going down this path, I'd still highlight that if you look at the Euro versus the dollar. Since the inception of the euro, I think we peaked in 160. So this is obviously the reciprocal of that you have on the screen, right? But so $160 per euro, and at that time it was before the financial Crisis, I think it's 06 07. The dollar was still the reserve currency of the world. It was still the most used currency for global transactions. So, I mean, we're currently at 117.50. They're about in euro versus dollar, and we're already talking about whether this is the end of the dollar. We can go much lower in the US Dollar without it being the end of the dollar. Much lower. It's very, very early to talk about that. This is currently merely a response to the US not being willing to take as active a role globally. And I get the political rationale behind that. But of course that will impact the decision making by the Chinese Central bank, the Russian Central bank, the Indian Central bank, et cetera. With India now being targeted right, left and center with secondary terrorists because of their relationship to Russia, et cetera, they all also have to face the reality that they have to be able to intervene in the currency market with other means of exchange than the US Dollar. Since they're not exactly on the friend list of Washington. Right. I mean, they're in this weird spot where they've talked to both sides for a while, but they're certainly not on the friend list. And when you're not on the friend list, you have to take into account the mere risk that your reserves are confiscated. That was exactly what happened to Russia. And when that risk, even though that risk is, say 2, 3%, if that risk moves from 2% to 10%, you have to take some decisions on the back of that. And that's exactly what's going on.
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Great stuff, very interesting. I just thought I'd throw, throw this in because it is, it is such a remarkable number when you zoom out a little bit. Any final points before we round off here, Andreas?
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No. I mean, it's a big week in terms of Fed speakers this week, we've already had a couple of them out stating that they only backed this insurance card from the Federal Reserve last week because they had, you know, some early reservations against how to read the current labor market trends, etc. So we're not exactly getting, you know, the kind of messaging that Trump is after from these members. But we'll see during the week. As I said on Friday when we hosted this show, and as I said last week after the meeting. Remember that this is, you know, the trajectory set by a Federal Reserve Committee that is not impacted by Trump in any major way, shape or form yet, but it will be, it will be in maximum three, four months from now. We will get plenty of right cuts from here.
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B
That's great stuff. That's very reassuring on a day such as. Andreas. Anyway, that's all we had for you this week. Thanks a lot to you, Andreas, for joining. Thanks to all the listeners for the questions all across the space. And thanks all you for joining us. We'll be back next Monday. See you then.