Macro Mondays Episode Summary

Podcast: Macro Mondays
Host: Michael Wolfenwald (substituting for Andreas Steno Larsen)
Episode: How to Trade the Geopolitical Firehose
Date: March 25, 2025

Episode Overview

This solo-hosted episode features Michael Wolfenwald stepping in for Andreas, with a focus on breaking down the latest geopolitical flashpoints and their impact on global markets. Michael draws on his expertise in geopolitics to analyze key situations—from Greenland’s independence debates and Ukraine peace negotiations, to turmoil in Turkey and renewed Middle East hostilities. The show is packed with actionable macro and trading ideas, particularly in defense and commodities, all delivered with Michael’s trademark candidness.

Key Discussion Points & Insights

1. Geopolitical Overview and Real-World Market Impact

• Approach:
  Michael brings a candid, transparent take, reminding listeners that "our trade ideas and our analyses—they might be sometimes maybe good, sometimes maybe shit." (01:50)
• Intent:
  The goal is demystifying how evolving geopolitical landscapes directly impact portfolios, with a particular focus this week on Greenland, Ukraine, defense stocks, the Middle East, and tariffs.

2. Greenland: Independence, U.S. Interest, and Political Reality (02:40–13:00)

• Recent Developments:
  • Ongoing U.S. interest in Greenland, amplified by symbolic diplomatic visits.
  • Despite talk of independence, Greenlandic appetite for rapid change has cooled:
    "Quick independence meant becoming a U.S. territory. And that's definitely not what they meant by independence." (06:20)
  • All Greenlandic politicians more or less support independence, but there is no rush:
    “To say that the independence wing has won this election is like saying that the anti-monarchy wing won U.S. elections. […] The only party really pushing for accession into the United States, the collect party, received 300 votes.” (08:10)
• Market Impact:
  No investment thesis for Greenland; “very, very little action on this because there’s not a whole lot you can actually do.” (12:45)

3. Ukraine: Peace Negotiations, Trump’s Strategy, and the Market Outlook (13:00–34:10)

• Negotiation Framing:
  • The peace process is described as "kind of an M&A process here." (15:22)
  • Trump first secured a mandate from European allies and Ukraine, likened to meeting with “your shareholders.” (16:00)
• Expected Negotiation Style:
  • Volatility is likely: “When he doesn't get the other party to do what he wants, he pushes tariffs, he pushes sanctions, he…withdraws support, etc.” (18:18)
  • Trump is expected to ratchet up pressure/tactics until concessions are made.
• Outlook:
  • Michael’s base case: “We’re looking at a ceasefire within one to two months here, an overall ceasefire as the next step towards an actual peace.” (23:02)
  • If realized, it’s “very, very good news for markets…in particular, Eastern European equities.” (25:20)
• Notable Listener Q&A:
  • On claims of Russian infiltration in U.S. administration:
    “It's very likely that the US Administration is to some extent infiltrated by Russian intelligence…[but] the timing...has something to do obviously with the fact that there's a new president...another factor is the simple fact that Ukraine is losing on the ground.” (27:35)

4. European Defense Spending: Winners, Losers, and the Drone Revolution (34:10–44:55)

• Defense Stocks:
  • "Europe is trying to re-arm itself and...do so by purchasing European-built weapons. […] A lot of the expected increases in military expenditure has already been priced in." (35:45)
  • Cites production bottlenecks: “Over the course of the Russo-Ukrainian war, North Korea has…delivered more than five times the number of shells than the entire European Union has.” (37:20)
• U.S. Defense Sector Edge:
  • Michael sees outsized opportunity for U.S. arms manufacturers: “They’re the only ones able to deliver at a large enough scale to satisfy the demand coming out of European defenses right now.” (39:50)
• Shift to Drones:
  • Fighter jets are losing relevance to drones and autonomous systems:
    “Drones is where it’s at…this purchasing spree in Europe has [not] been priced into this sector yet at all.” (42:00)
  • Names AeroVironment, Red Cat Holdings as top U.S. drone stocks to watch.
  • Suggests looking at “autonomous technology and robotics ETFs” for broad exposure. (43:40)

5. Turkey: Political Manoeuvres and Investment Caution (44:55–48:15)

• Political Risk:
  • President Erdogan’s legal strategies to sideline rivals are described as “a very, very sneaky way of getting a rival out of the picture.” (45:20)
  • Result: Turkish lira turmoil and political instability.
  • “Not a game for me, I have to say…too violent, too volatile for me.” (47:20)

6. Middle East: Ceasefire Breakdown and the Red Sea Effect (48:15–53:55)

• Ceasefire Collapses:
  • Previous Trump-brokered ceasefire between Israel and Hamas has broken down.
  • “If Trump gets the credit for the ceasefire, he should also get the heat from the ceasefire breaking down.” (49:42)
• Broader Impact:
  • Hostilities resume in Gaza and potentially Lebanon, with ripple effects like renewed Houthi missile attacks on shipping.
  • Implication for markets:
    • Red Sea shipping disruption continues, stalling the potential relief for European inflation. (51:50)
    • Geopolitical risk premium in oil to increase in the short-term: "I think we are seeing a short term rally in oil before we get back to the overall trend...a declining price." (52:20)
    • $50/barrel is likely the floor where U.S. shale is endangered.

7. Tariffs: China, Commodities, and Market Plays (53:55–1:00:40)

• Tariff Outlook:
  • "China is the one country that's not overly concerned with the…outlook of U.S. tariffs." (54:30)
  • Michael does not anticipate a quick resolution; expects tariffs to persist into the summer.
• How to Trade It:
  • Copper: Frontloading/hoarding before tariffs could unwind, leading to a "slow sell off in copper"—they are short copper. (56:15)
  • Gold:
    • Watching for exemptions on Swiss gold; U.S. may be lenient to avoid destabilizing the dollar’s reserve status.
    • Exclusion of Switzerland could relieve upward pressure and “could put [gold] well below the $3,000 mark here.” (59:00)

8. European Equities: Rotation Running Out of Steam (1:00:40–1:04:00)

• Valuation and Growth:
  • “A lot of money being moved out of US equities and into European equities…that is to some extent priced in already.” (1:01:25)
  • Cautioned that continued outperformance depends on strong US consumer sentiment, which seems to be waning.
  • “Perhaps we don’t have that lack of valuation [discount]…maybe it’s time to consider the timing of these European positions.” (1:03:25)
  • Not a call for outright selling, but urges careful re-evaluation.

Notable Quotes & Memorable Moments

• “Our trade ideas and our analyses—they might be sometimes maybe good, sometimes maybe shit.”
  – Michael Wolfenwald (01:50)

• On Greenland’s political climate:
  “If Bernie Sanders were to pick a party in Greenland, these guys would probably be too left wing for him in some cases.” (10:10)

• On Trump’s negotiation style:
  “When he doesn’t get the other party to do what he wants, he pushes tariffs, he pushes sanctions, he, he withdraws support, etc. He very obviously did this with Ukraine.” (18:18)

• On defense bottlenecks:
  “Over the course of the Russo-Ukrainian war, North Korea has…delivered more than five times the number of shells than the entire European Union has.” (37:20)

• On drone tech:
  "Drones is where it's at…this purchasing spree in Europe has [not] been priced into this sector yet at all." (42:00)

• Eurozone caution:
  “Maybe it’s time, at least for us, to consider the timing of these European positions. I’m not saying you should short Europe…but you should consider how much longer this story can go on for.” (1:03:25)

Timestamps for Key Segments

• Intro, Show Setup & Disclaimer: 00:00–02:40
• Greenland’s Geopolitics: 02:40–13:00
• Ukraine Peace Negotiations: 13:00–34:10
• European Defense, Drone Revolution: 34:10–44:55
• Turkey Political Intrigue: 44:55–48:15
• Middle East Hostilities & Red Sea: 48:15–53:55
• Tariffs & Commodity Trades: 53:55–1:00:40
• European Equities & Macro Rotation: 1:00:40–1:04:00
• Sign Off: ~1:04:00

Tone and Language

Michael maintains a candid, unvarnished style, often punctuated with dry humor and blunt assessments (“too violent, too volatile for me” on Turkey; “sometimes maybe good, sometimes maybe shit” about their trades). This creates an engaging, accessible atmosphere despite the episode's data-heavy content, while consistent on actionable advice.

Summary Takeaways

• Geopolitical turmoil in 2025 is creating both risks and opportunities in global markets.
• Ukraine peace talks remain volatile but could spark a relief rally, especially in Eastern European assets.
• U.S. defense stocks—especially in the autonomous/drones sector—are positioned for continued demand.
• The resumption of Middle East hostilities revives commodity price risk, especially for oil.
• Upcoming tariff battles (mainly U.S.-China) and commodity positioning (short copper, watch gold) present near-term trades.
• European equities may have reached peak valuation, and caution is warranted.

Next up: Andreas is expected back next week; Thursday’s Pro Macro show will dive deeper into defense sector technicals.