A (3:15)

I don't think he's launched the paid substack yet, but he should do so. Maybe he's betting on prediction markets. That could at least be one way of him.

C (3:24)

That's actually very likely. Yeah.

A (3:28)

So having said that, he's called Trump a reverse indicator. Some call him the orange Jim Cramer now, and I'm not sure whether that's fair or not. But having said that, so far today, the Hopium installed in markets by Trump just before the open bell has sort of fizzled out already. So I think, as we've said a few weeks in a row now, time is running out.

C (3:58)

It is probably like that with real opium as well. For each you take it, you need a little bit more, a little bit more hope. And yeah, Andreas, so, so we are essentially back to the situation one week ago from being a little, little harsh here. We had this post on Truth Social from Donald Trump this morning that the United States are still in very serious discussions with a new regime. And if things don't go well, it's not quite clear if this is the same April 6 deadline. They're going to bomb the shit out of them, essentially. So is the market reactions or are the market reactions justifiable out of this address? Or is this, as you call it, Hopium, Is this just kicking the can down the road from the Trump administration?

A (4:41)

Yep. But remember exactly a week ago when we hosted the same show at the same time, we were discussing the exact same thing. And, you know, it was last Monday he started airing the prospects of direct negotiations with the Iranian regime. Here we are a week later, we're still apparently in serious discussions with them. They keep refusing it themselves. So I, you know, I'll ask you what to think here because as I've said, you know, I'm very focused on the supply chain ramifications of this and whether we can actually get out of this without damage to the global supply chains. I still think there's time, but as I've said, time is running out. And as you also refer to, it's simply not enough to just say that we're still in negotiation, we're still in negotiations, we simply need something more tangible now.

C (5:36)

Yeah, absolutely. At least a picture from negotiations would be nice. Someone shaking hands or being in this conference room with a flags, at least that would be great. This is Beginning to look a little shady here. No, I think where we're at, Andreas, and let's be completely honest, neither of us knows what's going to happen here, much less predicting the future here. But what we do know is that some talks or there are some contact, at least some talks are going to be had. It's very clear that Donald Trump oversolds things last Monday. But obviously we're probably closer to actual talks right now and there are some back channeling going on. What we do know is that as this is going on, meanwhile, the US Is conducting a massive military buildup in the Gulf this weekend. We have the USS Tripoli with the 31st Marine Expeditionary Unit. I've talked a lot about that. They arrived in the Gulf. So the US have a bit more troops down the 82nd airport. Airborne are deploying as we speak over this coming week, likely and during April, we're going to see more forces added to that, probably another Marine expenditure unit and more importantly, another aircraft carrier towards the middle of April. So it's also entirely possible, I have to admit, that this is simply buying time for the US to get forces in place for the next phase of the war. That is something that we can completely rule out, that this is all show. I still think, personally, I believe they are trying to get a deal. They would like to avoid boots on the ground, but there's also a massive momentum building for finishing the job, you know, killing off Iran once and for all, especially from Israel and that side of things. So, yeah, not a very clear answer, Andrew, here. Andreas, I'm sorry about that, but that is the way I see it, that we have several paths ongoing and it's, it's still unclear which one Trump is going to choose. So maybe a question back to you, Andreas. Does he have three to four weeks to wait for negotiations or are the costs beginning to stack for him?

A (7:46)

So let's start with the oil situation, right? We lost say around 20 million barrels a day when the Strait of Hormuz closed. And, you know, we've had a lot of mitigation efforts undertaken. We obviously see the piped oil to Fujairah in United Arab Emirates. We also see this east to west pipeline being fully utilized by the Saudi Arabians now. So they're basically piping the oil to the other side of Saudi Arabia and shipping it out of there. That has added, say, a handful of million of barrels a day. We've also seen this negotiated deal, probably by the Pakistani mediators, to allow some ships to go through the strait. Trump announced this, it was a date yesterday, and we're talking about eight ships. So as far as I can calculate, we're roughly talking about one and a half million barrels, something like that a day over the coming days. So, you know, they're trying to do their best to mitigate the issue with oil. My concern is that they're not really thinking about all the byproducts. We've talked about helium, we've talked about sulfur to some extent, nat gas as well. It seems like they're very focused on crude oil and obviously that is also the most important. But these by products probably tend to be forgotten in these negotiations. So, yes, there's still time, but not a lot. That is the simple answer to this question. From what I can gather from many of my investment bank counterparts here, we're talking about a completely frozen market and risk assets now. You know, all of the long only managers, they're just sitting on their hands. They're not willing to buy anything. Let me show you a brief flowchart. I think we have it on page 13 or something like that. Yeah, there you go. I mean, we've seen these funds buying energy, but that's basically it. And to be honest, I also struggle to find any other good expressions of a trade right now. What do you want to trade if you're not trading long energy, given this? And yeah, the other expressions are basically relative, if you know what I mean. You need to trade relative trades or enter on the short side. And we've been sitting on our hands as well, trying to be patient and, and, you know, allowing Trump to, to pivot or, or to, to find an exit ramp or north ramp, I'm, you know, to be honest, because what worries me a little bit is that we see this, we see this momentum as well in, in prediction markets now in favor of boots on the ground, right? Not, not this month, but, but for April especially, I think we're talking about 70% probabilities being priced in now. And we know that insiders trade this. So it worries me and it has, you know, I've received a lot of questions on it from, from our hedge fund counterparts as well. The only thing that comforts me when it comes to this question on boots on the ground, which is, you know, in a sense pretty unsettling in itself, is that Trump is not the typical president. Right? He can pivot, he can spin victories, he can create his own narrative. He wants to. In many ways. I would personally consider us being past the point of no return if this was any other president than Trump, but I'm not sure with Trump because he's able to pull the rug from under this whole narrative and then get everyone to accept it and agree with, with it to some extent. I'm, I'm not sure Lindsey Graham will, will lament it if, if they decide to just stop the war. I mean, within the president, they would probably have accused him of u turning or whatever, but not here. So I still think there's hope that he can actually, you know, create a deal. And I, I cynically based this on the way that he's conducted geopolitics during the second term. I mean, this is what he's done with Greenland, with tariffs, with, with everything. Right? Yeah.

C (12:08)

And he's essentially doing what most of his closest advisors advised him against doing. So can they really criticize him if he then goes back to their advised course of action, that is 4D chess, maybe at some point, if he can manage to do that. But I agree with you completely. He had such a strong grip on the Republican Party, on American politics in general, that he can get away with most things. And again, we had a question here from a listener called Gordon Plague. A good question here. If the Iran war drags on, what's the likely effect for us midterms crypto policy and crypto price action? If we begin with the midterms here, Andreas looking at the polls, yes, they're beginning to hurt him a little bit on the approval ratings. The Iran war is not popular, but it's far from disaster territory. If he can get away with it from this, with a seemingly win, maybe do a parade or something, you wouldn't begrudge him that. I think it's going to be okay for the midterms. I think the Americans have lots of other stuff to focus on. Most of the political debate in the US as far as I can see it, we're sitting here in Europe. It's just as focused on the safe act, on voting rights. I think in the rest of the world, and probably in the Twitter sphere and investors, we tend to overestimate how much the electorate actually cares about this stuff. They will begin to care if they deploy 200,000 troops there. So if this becomes a forever war, they will begin to care. As long as this is a tip of the spear operation down in the Middle East. Yeah, who cares until it either involves several hundred thousand troops or until it hits their, their wallet in, in a big way, Andreas. And even so, they are beginning the argument that, okay, this is costing us, what did they say, 50 days of volatility for, for 50 years of, of, of, of world peace, essentially, which is obviously, yeah, quite a spin. But, but anyway, they're preparing that, so I wouldn't be yet too concerned. I think there's still a window to handle this when we're talking about the midterms. Then there's crypto, Andreas, as Gordon talks about here, I've seen all sorts of angles about this being a payment for getting the banks to support the Clarity act, et cetera. I don't know about that. But, but we're seeing quite resilient price action in crypto. How do you view that market over the past few weeks? Andres?

A (14:37)

Yeah, well, it's done better than most pure assets. And I think the simple reason is that crypto has been used as a way out of the region in many ways. Down there we saw how bitcoin was used as a mean of exchange for wealthy families trying to escape some of the capital restrictions in place in Dubai and that region. So in a sense, it's probably overstating it a little bit. It has almost become a blessing in disguise for the crypto market, at least on a relative basis. At some point on Friday, bitcoin really looked like an asset that was about to puke, but we've stabilized since. So let's see if the damage hasn't been fully done, technically speaking. But I when it's very difficult to find a technical chart that looks solid right now on the long side, I'll have to admit to that. And if you look at the price action today across the board, we see interest rates down a lot. We see the dollar strengthening, oil is not down and risk assets are sort of flattish across the globe. I, I'm. It worries me when interest rates go down while you don't see a weaker dollar, while you don't see oil prices coming down because that's the market starting to price in that this will hurt essentially. Right. And you know, we, we probably run some of the most sophisticated nowcasting on earth in our company, nowcast iq. And there, there is no damage to be seen yet on the growth cycle in the U.S. let me just reiterate that there is damage to be seen on the business cycle in China, in the Eurozone, but not yet in the US and it is also a story that is gaining momentum in the U.S. well, we're, we don't even care about the straight of a moose because we don't use it. You know, that's explicitly been stated by several officials. Right. But it is absolutely Fair. What I just have to remind those people of is that, well, even though the US Is a pretty domestic economy compared to other economies such as the European, for example, the Max 7s will still struggle and suffer a quarter or two down the road if the consumption comes to a certain halt outside of the US So I don't think they're completely isolated from the rest of the world. They're just running with longer legs. And that is in itself slightly worrying because that basically means that you can probably allow this to run for longer without really seeing the damage in the US but by the end of the day, the damage will be there if the rest of the world slows. Yeah.

C (17:32)

Okay, Andreas, let's have two interesting listing questions here on both sides of this sort of very binary outcome space that we're looking at. So Roberto F. Here says if you clearly realize there's permanent damage to the business side, so that is sort of the pessimist scenario here. What immediate actions would you take in your portfolio in terms of positions, allocations and or themes?

A (17:56)

Let me show you one chart on page 10 in relation to that because we got the first glimpse of the Hormuz inflation today when Germany posted inflation numbers for March. They released inflation numbers already on the last day of the month and inflation was up 1.1% ish on the month. And we're now close to 3% year over year in Germany from 2% levels. So that basically means that the European Central bank is back under pressure. We see similar trends elsewhere. And even though the pass through is much smaller in the U.S. it's an early warning signal of what you'll see elsewhere. Therefore, if beep hits the fan, pardon my French here, we'll probably have to look into the 2021, 2022 playbook to find solid hedges in the market. And there is only one solid hedge in the marketplace if inflation goes up and growth goes down, that is energy. I've been vocally stating for a long time that energy stocks are the new bonds of a portfolio. Remember the old 60, 40 setup where you had stocks and fixed income. Now you need technology and oil basically, to put it a little bit simply speaking, right? And you can actually create a very simple strategy since say 2019 and 2020, where you just have a 60% allocation to hyping that US risk asset exposures and 40% allocated to energy and then you create a better shop range of portfolio than being long either. All right, so I think that is the key takeaway here. I know it's a pretty vanilla Takeaway, but it's, it's the only thing that works if we continue down this path for say another few months. Have I bought 40% of energy? No, just trying to scan through there. Probably around 10, 15%. So I haven't hedged fully and probably not intending on doing so until I, I lose patience with Trump. As you said on Friday when we hosted our Drinks with show, you think I'm the only person on earth with a shorter attention span than Trump, but I haven't lost my hope. Now that would be preferable for the world economy.

C (20:32)

Yeah, new target. Cuba is way less, has way less spillover effects to the world economy. Now, no jokes in that. Okay. The flip side of this address Tom needs from Dubai here. When the dust eventually settles on the war, hopefully who stands to benefit the most in markets? So this is interesting question because when this war ends, what are the same stocks going to be working that worked before this or have some sectors taken or some areas taking permanent damage from this, you think?

A (21:06)

I don't think we've seen permanent damage to for example, the AI supply chains yet. And there's still time to recover those supply chains. Even with a lack of helium exports from Qatar. I made this simple study on the semiconductor exports from Taiwan and Korea to the US and their typical relationship with semiconductor stocks. And had it not been for this war, my best assumption is that semiconductor stocks would have been up in between say 25 and 50% in March. That much because we've seen a tremendous momentum in semiconductor exports the whole Asian business cycle through March still, I mean, it's still working live because there are obviously lags from a block straight of a moose until you actually see that in the supply chains. So should we get a recovery there and an immediately better medium term outlook for the whole helium supply chain of semiconductors? Oh boy, a recovery will have in that space. And that's why I'm still pretty invested in that supply chain, even though it's been painful for the past weeks here. Because in a dust seven scenario they're going to rally a lot. And that would probably be my trait. On the other side of this, should we actually get to that recovery scenario? But it depends on Trump. And a lot of people say you need to trade this without caring about Trump. And I'm like, I don't really think it's possible to be honest. And that is kind of the exact definition of a crisis. Right? You just sit there and stare at the screen waiting for the next headline and waiting for the next progress out of These negotiations because that's essentially going to define whether we're doomed or not.

C (23:04)

So usually we would be talking a lot about the upcoming numbers this week we have the ISM manufacturing pmi, we have the non farm payrolls. Are you even watching the ISM announcement on Wednesday? I know the non farm payrolls are still important but, but, but what's your expectations here?

A (23:22)

Am I watching it? Sure. Is it overly important? No, I, I, I think the market will you know, tend to, to just view it as outdated in, in the sense that much of the information that has been gathered was gathered ahead of the, you know, escalation into month and the lack of progress. So I don't think it's overly informative to be honest to look at numbers that were gathered mid to late month because we've simply had so much new information since I noticed that not a single forecaster predicts a negative month on month print. Not non farm payrolls. We had a negative print last month but we have a pretty wide outcome space. But not a single negative from the professional forecasters. The gathering we've done on various inputs for this month we do have a few predicting a negative. So I think the street sentiment is worse than the Wall street sentiment on both ISM and non farm payrolls this week. Which should comfort you a little bit when you look at the consensus figures put in there. The consensus also expects ISM to print exactly where it printed a month ago. I would be surprised if it doesn't print higher because you know much but a lot of this information is slightly lacked. So I actually think net net that will get better news than the strength anticipates for this week.

C (24:51)

So hot as in report a bloody Job creations number.

A (24:57)

Yeah, but, but still that, I mean the expectations are so shitty already. That's kind of my point. So you can have a pretty bad number number without really shaking stuff up.

C (25:07)

So are there any openings for, for cutting season? We have, we have a few questions on that as well. Or, or is it simply impossible to even contemplate cuts in with this war going on?

A (25:19)

You know, while, while we're talking here, Stephen Mirren is, is live on cnbc. I can see that from my left screen here. And he, he keeps repeating that he wants to cut a, an index point this year. I think he's the only one left saying that.

C (25:33)

You can count on him.

A (25:34)

At least let me put it like that. He's the only one left saying it. You won't get anyone to commit to that until we know whether this ends up in the perma war or not. It's as simple as that. I'm tempted to say that the European Central bank and bank of England will not move towards rate hikes here in April. Some people fear that. Yeah, the market is backtracking a little bit. And the inflation report from Germany today, even though it was bad, it was less bad than feared and there is no contagion effect in inflation, if you know what I mean. There is of course inflation in energy products, but it's not like we see it spilling over to all sorts of things that will take time and that, that basically means that the European Central bank can wait and see maybe a month further before they respond to this. So yeah, let's see. I think we'll, we'll get on the market better news than fear this week, but again it depends on whether this hopium that we get every Monday is

C (26:38)

actually

A (26:41)

worthwhile listening to or not.

C (26:43)

We need more. Maybe, maybe two, two per week or maybe.

A (26:46)

Yeah, we need something tomorrow as well.

C (26:48)

So photos, Photos please. Anything? Yeah, let's do a final question here. An interesting one here from Filippo Cerrone here. What happens if or when the EU US relationship comes to a point where EU money is brought home at a faster speed and leaves the eu? So it's brought home from the US at a fast speed because of the Brussels moral situation, as it says here. So as a response to the boys or to US policies, do you see that happening and what would that mean?

A (27:22)

Well, I mean amidst all of the turbulence we had between the US and the Eurozone last year and also into the beginning of this year, we've actually seen flow data that doesn't really back the notion that foreigners are fleeing the dollar market. We've actually seen record inflows during the last 12, 15 months, which admittedly is a tad surprising. Let me put it like this. By the end of the day the market is cynical. So if the true growth in revenue, the true growth in earnings per share, et cetera, comes from the us, the market will chase that. Unless we're talking about a complete landslide in the rule of law. Some would claim that we're on a slippery slope already in relation to that. And I do hold some sympathy for that view, but it takes longer to fully erode that. So no, I think it is over subscribed to this story that the Europeans will just repatriate the money into the European equity market. Trust me, I'm looking every single day for solid companies to buy in Europe. It's not easy to find it's not like you're piling billions into something that is, you know, not a feasible story from an earnings per share perspective. And, you know, at least in the, in the historical context, the US Market is not particularly expensive versus PS right now, especially not after what we've seen since October last year.

C (28:53)

No, no, I mean, address this entire crisis only, only deepens the, the European worries on energy. I mean, it's. Yeah, that problem is still there. Okay, Andres, that's pretty much all we had for you this week. We have lots of great content coming up during the week. Remember to tune in for my interview with Marco Papich on Wednesday at 2 Eastern. We're going to dive much more into the outlook of the Iran war and what a timeline might look like. And also, obviously, if you're on the approach here, be sure to catch Andreas Steno signals. I don't know if it's out yet. It's usually released a little later that I'll show here. But coming throughout the day, any final thoughts, Andreas?

A (29:35)

No, I count on the orange man doing the right thing here and it may be wrong. And then we'll have to recalculate in a week from now.

C (29:43)

Absolutely. And we'll be covering that in our portfolio update as well. We give you our weekly thoughts on how to position for all this. That's all we had for you. Thanks a lot to you, Andres, for joining. Thanks for all the great questions. Once again, please keep them coming and please join us throughout the week here at Real Vision. See you out there.