Macro Mondays: Episode Summary – "No More Safe Havens? Well, Maybe..."

Release Date: April 1, 2025

In the April 1st, 2025 episode of Macro Mondays, host Miguel Rosenwald engages in an in-depth conversation with Andreas Dino, delving into the intricate dynamics of global macroeconomics and geopolitics. The discussion navigates through the tense negotiations between the United States and Russia, the impending Liberation Day, impacts on various economies, and the shifting landscape of safe havens in the financial markets. This summary captures the essence of their 27-minute dialogue, highlighting key points, insightful analyses, and notable quotes with corresponding timestamps.

1. Introduction to the Episode

The episode kicks off with a brief exchange between Miguel Rosenwald and his guest, Andreas Dino. Miguel sets the stage by emphasizing the podcast's mission to dissect macroeconomic trends and geopolitical events, offering listeners a transparent and independent analysis devoid of capital interests.

• Miguel Rosenwald [00:09]: Welcomes Andreas back to the show, hinting at the busy and possibly tumultuous nature of recent events influenced by Donald Trump's communications.

2. US-Russia Negotiations and Tariffs

A significant portion of the episode revolves around the escalating tensions between the United States and Russia, particularly in the context of ongoing negotiations and the imposition of tariffs.

• Discussion on Liberation Day [00:21 - 02:37]: Andreas expresses uncertainty about the upcoming Liberation Day, suggesting potential economic setbacks, such as loss of profits from the previous year. He also references the negative market sentiment influenced by White House communications.

• Miguel [02:37]: Outlines the smooth progress of negotiations leading to a Black Sea truce and hints at a general peace agreement. However, he notes that President Trump is intensifying rhetoric due to perceived slow progress, aiming to expedite a deal before Putin gains further leverage.

• Key Quote [06:38] Andreas Dino: “Trump is obviously trying to muscle through a deal. He's trying to use all the available methods of pressure that he has.”

The conversation touches upon Trump's threats to escalate sanctions not just on Russia but also on third-party countries engaged in trading Russian oil, such as India and China. Andreas highlights the complexity of implementing these sanctions given Russia's dominant position in the negotiations and the technical constraints imposed by the European Union.

3. Impact on the US Economy

Andreas and Miguel delve into how the imposition of tariffs is affecting the US economy, particularly focusing on import volumes and GDP calculations.

• Andreas [06:38 - 12:01]: Explains that the surge in imports before the tariff deadline has artificially inflated import volumes, negatively impacting the GDP calculations. He anticipates a rebound in the US economy post-Liberation Day as the "front-running" of imports stabilizes.

• Notable Quote [11:56] Andreas Dino: “We're heading for us, to use Zealand's words, how about a rate cut.”

Andreas suggests that the Federal Reserve might respond to the tariffs-induced supply shock by cutting interest rates in the near future, based on the temporary nature of the tariff impact on import prices. He posits that once the immediate effects of the tariffs dissipate, the economy's technical downturn will reverse, paving the way for economic recovery.

4. US Equities Outlook

The discussion transitions to the performance of US equities, particularly the S&P 500, in the context of current economic indicators.

• Miguel [14:10]: Brings up a listener question regarding whether the US equities market has reached its bottom, referencing a chart Andreas had previously shared.

• Andreas [14:47 - 16:08]: Argues that unless a significant structural event occurs, such as a crisis reminiscent of the 2008 financial crash, the market is unlikely to experience substantial downside. He points to positive trends in the US dollar, global bond yields, and money growth as indicators of an impending accumulation zone for equities.

• Notable Quote [14:47] Andreas Dino: “Unless this is some sort of structural event or a, you know, 08 style crash, it's very hard to see a lot of downside from here.”

5. Global Market Reactions: Europe, China, Japan

The podcast explores how global markets, including those in Europe, China, and Japan, are reacting to the ongoing US-Russia tensions and tariff implementations.

• Nikkei Sell-Off [16:21 - 19:15]: Andreas draws parallels between the recent 4% drop in the Nikkei and the significant market downturn experienced in August of the previous year. He suggests that repatriation of funds from international markets back to home soils is weakening the dollar and may lead to a rebound in US markets.

• Notable Quote [19:15] Miguel Rosenwald: Summarizes that Europe's and China's gains are now at risk due to missing export tailwinds from the US.

Andreas emphasizes that European and Chinese equities, which previously had inflated performance based on internal factors like pension fund inflows, are now falling globally, indicating a tightening necessity for a more favorable negotiation environment. He predicts that as local markets suffer, there will be stronger incentives for these economies to reach agreements with the US.

6. France's Political Landscape and Its Economic Implications

A significant segment of the conversation focuses on France's recent political turmoil and its potential repercussions on the European economy.

• Marine Le Pen’s Legal Challenges [20:15 - 25:26]: Miguel introduces the topic of French politics, discussing the recent verdict barring Marine Le Pen, the leader of the National Rally party, from running in the upcoming presidential elections due to mishandling of funds. Andreas and Miguel analyze the impact of this verdict, suggesting it could galvanize the National Rally by casting them as victims of the political establishment, potentially strengthening their position in future elections.

• Notable Quote [21:33] Miguel Rosenwald: Describes the verdict as a "tremendous platform for the National Rally Party," indicating potential long-term implications for European political stability.

Andreas observes that the immediate market reaction was negative for French bonds, reflecting investor anxiety over the political uncertainty. He argues that this development undermines the narrative that Europe can thrive independently of the US, reinforcing the interconnectedness of global economies.

7. Shifting Safe Havens in Financial Markets

Addressing the episode's titular theme, Andreas and Miguel discuss the evolving concept of safe havens amid current geopolitical tensions.

• No Clear Safe Havens [25:26 - 27:08]: Andreas posits that traditional safe havens are dwindling, making it challenging for investors to find secure investment avenues amidst the volatility caused by tariffs and political instability. He advises caution, particularly regarding long positions in European and Chinese equities, and highlights opportunities in commodities and fixed income markets, albeit with nuanced strategies post-Liberation Day.

• Notable Quote [25:45] Andreas Dino: “I think U.S. assets will eventually rebound on the other side of Liberation Day.”

He suggests that while US assets may recover following the lifting of tariffs, commodities like gold might face downward pressure, and copper could be primed for significant sales. In the fixed income space, Andreas recommends aligning strategies with the current administration’s tariff policies, noting their intention to influence long-term bond deals.

8. Conclusion and Forward Look

Miguel wraps up the episode by summarizing the key takeaways and teasing future discussions, including a talk with Marco Papich on geopolitical matters. He reiterates the importance of engaging with their Pro Macro package for more in-depth analysis and reminds listeners to submit questions for upcoming episodes.

Key Takeaways:

1. US-Russia Tensions: The strained negotiations between the US and Russia are escalating, with Trump increasing tariffs to expedite a peace deal, potentially impacting global trade dynamics.

2. Economic Implications: The US economy is experiencing technical downturns due to pre-tariff import surges, with expectations of a rebound post-Liberation Day as these effects normalize.

3. Equities Perspective: While the US equities market may be nearing its bottom barring a major economic crisis, global markets in Europe, China, and Japan are facing significant sell-offs influenced by interconnected economic pressures.

4. Political Instability in France: The disqualification of Marine Le Pen has profound implications for European politics and investor confidence, signaling heightened political risks in the region.

5. Evolving Safe Havens: Traditional safe havens are less reliable in the current geopolitical climate, urging investors to adopt more dynamic and nuanced investment strategies across commodities and fixed income markets.

6. Future Outlook: Liberation Day serves as a critical juncture, post which the economic landscape is expected to shift, influencing central bank policies and global market trends.

This episode of Macro Mondays offers a comprehensive analysis of the current macroeconomic and geopolitical landscape, providing listeners with actionable insights and a nuanced understanding of the complex interplay between global events and financial markets.