Macro Mondays Podcast Summary

Episode: Have We Reached the Bottom in Equities?
Date: March 11, 2025
Host: Andreas Steno Larsen
Co-Host: Mikkel Rosenwald

Overview

In this episode, Andreas Steno Larsen and Mikkel Rosenwald dive deeply into the turbulent state of global equities, exploring whether markets have hit their bottom amidst extreme policy and trade uncertainty. The hosts unpack central macroeconomic themes influencing today's markets—including US tariff policies, the behavior of bond yields, the outlook for inflation, and prospects in digital assets and European equities—all with their trademark candor and actionable insight. As always, trade ideas are served with a healthy dose of realism: “sometimes maybe good, sometimes maybe shit.”

Key Discussion Points & Insights

1. The Trade & Policy Uncertainty Overhang

[01:48–04:28]

• Market Turmoil & US Tariff Policy:

  • Andreas highlights that market volatility continues to be shaped by almost unprecedented levels of uncertainty, especially around tariffs:
    • “I cannot answer any questions on tariffs anymore. … No one knows the extent, no one knows the timing. I'm not even sure Donald Trump knows...” (Andreas, 01:56)
  • Uncertainty is running higher than during Trump’s first term, due to both greater scope and unpredictability.
  • Current administration tactics are deliberately pushing the dollar and bond yields lower, which could prove positive in the medium term.

• Hesitation on US Assets:

  • Asset managers are reluctant to add to US positions given erratic US policy signals and looming deadlines.
    • "Everyone I talk to... just tell me, okay, it's very, very difficult to load up on US assets right now. Because, why should I?" (Andreas, 03:28)

2. The Economic Timeline: When Recovery Might Start

[04:28–07:05]

• Strategic Policy Moves:

  • The timing of dollar weakening and lower yields suggests a calculated move to buoy markets by mid-to-late 2025, particularly ahead of the US midterms.
  • A modest equities rebound is likely, but not before tax season ends; real recovery signals may not surface until May.

• Inflation Print & Tax Dynamics:

  • Upcoming CPI numbers could foster a “bear market rally” if soft. However, April’s tax season pressure means lasting momentum probably waits until it's over.
    • “April tax season is pretty nasty... we need to get that out of the way before really turning the tide.” (Andreas, 07:30)

3. Fed Policy and Bond Yields

[08:17–10:02]

• The Fed is on Hold:

  • Jay Powell’s recent remarks convey a wait-and-see stance due to so many moving parts. Cuts may arrive “May, June, thereabout.”
  • Administration focus has shifted from short-term pressure for rate cuts to using fiscal tools to push down longer-term yields—a more impactful approach for the economy.

• Key Quote:

  • “It’s much more important whether 10 or 30 year bond yields are lower than whether Jay Powell cuts 25 basis points.” (Andreas, 09:09)

4. Tariffs as an Inflation Driver—Separating Myth from Reality

[10:02–18:49]

• Tariffs ≠ Immediate Inflation Spike:

  • Tariffs can raise prices, but who bears the cost is complex (exporters, importers, or consumers).
  • Past experience shows countries like China can reroute goods, soften the impact, or absorb costs to retain market share.
  • Current tariffs are “tariffs on everything except everything”—full of carve-outs and exemptions.

• Supply Stockpiling & Measured Effects:

  • Ahead of tariff deadlines, firms have heavily stocked up on inventories at old prices, muting immediate inflation pressure.
  • Andreas challenges mainstream fearmongering:
    • "No, it's nonsense... Of course a lot of trade will be rerouted. Of course we'll see dynamic changes." (Andreas, 13:49)
  • Base-case: only 1–1.5% increases in import prices likely, with maybe just 20–30bps passed on to consumers in the initial month.
  • Real-time price indices (“truflation”) show dramatic declines, with official CPI metrics overstating the risk.

• Contrarian Inflation View:

  • "I'm rather of the view that we get surprised in the other direction on inflation." (Andreas, 17:13)

5. The Dollar, Yields, and the Outlook for Risk Assets

[18:49–20:17]

• Weaker Dollar & Declining Yields:

  • Both are interconnected and signal a potential rebound for risk assets in the second half of the year, possibly earlier.
  • “When we get a weaker dollar and lower bond yields in tandem, it's something that will bring about optimism in a while.” (Andreas, 19:03)

• Medium-Term Bond Yields Crucial for US Treasury:

  • “If they can get five to eight year bond yields down, that's perfect.” (Andreas, 20:44)
  • The administration aims to roll over trillions in debt at mid-curve maturities, not just short T-bills.

6. Listener Q&A: Portfolio, Europe, & Digital Assets

[21:59–31:24]

A. High Beta and Mind Medicine Position

• Mind Medicine (psychedelics/biotech): Already sold, awaiting softer inflation and lower yields to reinvest.

B. European Equities—Caution After a Strong Run

• Despite recent European equity outperformance, renewed political uncertainty in Germany (e.g., the debt brake, military spending, coalition wrangling) is a red flag.
• Energy constraints (dependency on Russian gas), defense build-out bottlenecks, and systemic issues make aggressive plays in Europe riskier, even if the euro has been strong lately.
  • “We’re not able to build anything in Europe... All European defense manufacturers... need cheap energy and they need energy for that.” (Mikkel, 25:50–25:52)

C. Digital Assets—Conditions Ripening for a Rally

• Weaker dollar and lower bond yields are key triggers for a new leg up in bitcoin and digital assets.
• Historical chart correlations: About a one-quarter lag between dollar weakness and a bitcoin rally.
  • “So we’re talking, yeah, 10 weeks from now... before you really start to see the momentum back.” (Andreas, 27:54)
• Andreas intends to accumulate more bitcoin, though he remains skeptical of other crypto “reserve” narratives.
  • “I see the case for bitcoin. I see less of a case for ETH and the rest for this kind of reserve thinking…” (Andreas, 30:54)

Memorable Quotes & Moments

• “Sometimes maybe good, sometimes maybe shit.”—Mikkel, summarizing the podcast’s ethos on trade ideas (00:51)
• “I'm finally back and alive and kicking, but my portfolio is not doing overly well.” —Andreas, on the post-volatility landscape (00:25)
• “If import a car, you're not going to pass on that exact price increase penny by penny to your customer day one.” —Andreas, debunking simplistic inflation fears from tariffs (14:46)
• “We need the Russian gas to build weapons to fight the Russians.”—Mikkel, capturing the irony of EU’s position (27:00)

Timestamps of Key Segments

• 00:09–01:48: Opening banter, introduction, market turbulence recap
• 01:48–04:28: Tariffs, global uncertainty, dollar and bond yield trends
• 04:28–07:05: Impact timeline, midterm election strategy, equities outlook
• 07:05–10:02: Fed policy, bond yields, shifting strategy from rate cuts to curve management
• 10:02–18:49: Tariffs as inflation drivers, empirical evidence, truflation data, import dynamics
• 18:49–20:17: Dollar and yield macro play, risk asset rebound scenario
• 20:17–21:59: Listener: Debt refinancing and rates, curve targeting strategy
• 21:59–23:14: Mind Medicine position, high-beta asset performance
• 23:14–27:08: Europe outlook, German politics, defense manufacturing, energy dependencies
• 27:08–31:24: Digital asset rally timing, Bitcoin vs. other crypto utility, accumulation signals
• 31:24–32:20: Preview of next week, closing remarks

Final Thoughts & Takeaways

• We have not quite hit the bottom—but improving conditions in currency and bond markets may set the stage for a rebound in risk assets starting in late Q2, early Q3.
• Equity investors should look for confirmation from CPI prints and for tax-season headwinds to clear.
• Tariffs will drive some prices up, but supply chain adaption and inventory overhang make a sudden inflation shock unlikely—contrary to consensus fears.
• Europe’s moment remains clouded by politics and structural limits, while the US administration’s strategy is laser-focused on reshaping the yield curve rather than relying solely on rate cuts.
• Bitcoin and digital assets await a likely tailwind from dollar weakness—expected to play out over the next couple months.

In their words: “It’s not pretty right now, but this may be what they’re trying to obtain... maybe, and I stress maybe, it's not all that bad.” (Andreas, 18:21–18:56)

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