A (4:51)

This might admittedly be a joke but it's very well hidden in case and you know this, this vague hysteria is everywhere on X. So it's kind of sad. By the way, let me say that to the audience here, if you don't know a lot about Carl Gustav, the King of Sweden, please Google him. He's a pretty colorful insecurity profile. He's known as the Stripper King basically. So I don't think I've said too much.

C (5:20)

Great character turns 80 this week. So big congratulations to him and our friends over in Sweden. Now that we've insulted their king, let's move on Andreas to another another Laugh of the Week. I put it on the Laugh of the Week. So if it is a joke, fair enough. And this is we've been discussing this a lot Andreas, because you and I spend A lot of time on X and other platforms. And this is something that in my mind sets aside our platform on Real Vision from X. Because on X it's very, very hard to find something that isn't AI's flop these days. You sent me this chart, Andreas, of the use of not just a something, it's a. This thing. That phrase has, has the usage of that, that phrase has skyrocketed obviously due to AI. It is one of the very, very the most significant markers of it and it's, it's killing eggs in my opinion. Address. What do you think?

A (6:14)

So by the way, do notice here that it is a measure of the use of this phrase in company documents in the us. So basically quarterly reports. I've been a part of writing some of the content for Nordez old quarterly report, one of the big banks in Europe and we spent countless hours doing that without anyone reading it, I guess. So I'm actually a fan of letting AI write all of those reports. I'm especially a fan of letting AI write stuff that nobody reads, which holds true for a lot of documents, especially in big companies. But please, if you actually intend on something being read by others, do at least attempt to write the prompt yourself at the very least. I've stopped counting the number of takes I've seen on the straight of a moose, helium sulfur, all sorts of geopolitical commodity related stuff from accounts clearly not in the know. And admittedly I've been partially guilty of doing it once in a while, but I've actually, you know, I've told myself to stop it now. I mean stop using it unless you use it for something fruitful. Yeah, that's basically it.

C (7:37)

You could use it to, to correct the language or whatever. This is not our first language so I use it for that as well to be completely transparent. But, and, and to do some of your base research, et cetera. Absolutely. It's great for that but, but, but for writing takes science analysis out there. No, it's, it's, it's not worth it. And that's what we, where we try to go with a lot of the content on, on, on, on real vision, especially the things that we publish. So Andreas, maybe sometimes it makes me want to join this club. The crusade against data centers. We have a lot of, lot of laughs of this week, Andre. Angry residents removed local council members and are now aiming to recall the mayor. Uh, in a, in Festus Montana I think it is. It's a small town in America where a big data center is planned. Uh, sometimes obviously A big contrast to all the reports we're getting from Max7 companies on Wednesday. They're probably going to show great growth, hopefully even stronger growth than last year in their cloud services. An enormous capex. But this one struck me a little bit because at what point do we begin to get backlash at this?

A (8:43)

So to be honest, Mikul, this problem feels very familiar. You know, we're a small country. We have loads of wind turbines for the size of our country, also lots of solar. And every time you put up a wind turbine or a solar park, you have this issue. So I'm actually pleased to see that this issue is very much present in the US as well, because I sometimes get the impression that it's not. This is obviously one of the things that you need to deal with when you're building out data centers, also when you're building out the grid in conjunction with that. Because this particular story from Festus, as far as I'm concerned, one of our big portfolio positions, Bloom Energy, is supposed to deliver the exact decentralized electricity to that data center. So I mean, it is of course important also when you invest to consider these things because I'll perfectly admit to that. I probably would wouldn't accept living close to a data center either. No, I'll be honest about that. So there's a whole layer of logistics and infrastructural discussion that we need to solve here. And on the next page, which is an Iceland teaser for our show tomorrow, I'll spend a lot of time digesting what we've seen in the energy space, both, of course, from the Strait of the Moose, but also from some of these quote unquote, newer contributions to the electricity grid. First of all, nuclear. Nuclear, it's not new, but it's kind of seeing its renaissance in a sense. And then we have fuel cells, for example, Bloom Energy, as I mentioned, which has been on an absolute tier because it's one of the few technologies that you can use in a decentralized way. You don't need to connect to the grid. You can just run a fuel cell the locally and not care about whether the grid is about to overload or such things. And the big question now is whether nuclear was kind of the technology of choice for Scott Besant and his team. Fuel cells have so far been the technology of choice for executives taking a decision on ground where they don't want to be too sensitive to the electrical grid. But what about next year and the year after? I mean, we still have a load that we need to be able to cater for. And is solar the next trade? Maybe. Is it fossil fuels again, what's the next trade here? We'll spend a lot of time discussing that tomorrow.

C (11:17)

It's going to be really interesting. Andreas. Okay, let's zoom out a little bit and take a look at the macro situation. Andreas, before that, I completely forgot in the opening to mention our usual catchphrase and our disclaimer here. And that's probably comes at a good point, if we begin to dive into the macro world here, that we try to be as actionable and honest as possible, but our trade ideas and analysis might be. Summertime is maybe good. Summertime it may be shit. Absolutely, Andreas. So let's dive into it and maybe. I know we're sick of it, but we have to start in Iran again, right? We had this week's. I mean, we had a complete shit show of a weekend, to be honest. No real negotiations taking place. Trump claiming that it's too expensive to fly to Pakistan to negotiate. Then this morning, like a clockwork, you have our. Or earlier today, you have the Monday Hopium package, as I like to call it. So you had, I think it was Axios who reported that Iran has staged a new peace offer, a new plan for peace. In my opinion, that's a big nothing burger. They've essentially offered a Greenland package where the actual issue at hand, the nuclear issue, is postponed to be dealt with at another time. And then you simply just reopen the strait. That's just turning back time to before the war without solving the nuclear issue. I find it very hard to believe that Donald Trump is going to buy into that. But we are left in a situation address, to put it very simply, where both parties believe they have the strategic patience. Both sides believe that they have more patience than the other part. And that leads to a situation where nothing is happening because neither party has any real incentive or any real pressure to actually engage in in negotiations. And we're seeing a poor development in ships through the strait, at least officially, because we are also hearing reports of loads of Iranian Shadow fleet ships sailing very, very close to the coastline, dribbling oil out to India at least. So how do you view the situation, Andreas, this stalemate and how markets are reacting to it right now?

A (13:29)

Look at it this way. Both of the involved parties claim to have blocked the strait to begin with, so they obviously cannot publicly admit that oil is flowing at the same time. Neither of them can. Iran would never admit that some of the flows to the west, or maybe even to China are leaving from Iraq or Saudi Arabia in case it happens. And the US would never admit to the Iranian shadow fleet sailing along the coastline, first Iranian, then Pakistani and then Indian borders. But I think both are happening to some extent. To some extent. I don't know the extent, but to some extent. And both parties have an incentive in lying about it. To be honest. It's one of the things that I've said continuously over the past month or so that I think the flow is slightly better than what's being reported. And, and if you look at the so called oil on water measure, we have it on the screens in a second here. We also entered this conflict with quite a cushion. So if you look at the bottom right panel, first on crude oil, even with the extreme drawdown that we've seen since March, basically we're still in the higher end of what we we typically see on water. Right? So there is plenty of oil on water. Some of it is stuck in the region. But it's not like we have an immediate issue when it comes to crude. The immediate issue is more of a product thing. Look at jet fuel for example on the top left panel there. We're starting to deplete the floating storages at a pace that is not comfortable. So there are some niches that are under severe pressure already. But the overall picture is that we'll probably able to stomach this for longer than most people have thought and therefore I'm kind of in your camp now. Even though I've been wrong more than a few times during this four. I mean it's been very difficult to call the shots that I think the US is pretty okay with the situation as it is, sadly. And one example of it just over this weekend, I think it's on page 11. Miggle. We actually had negative NAT gas prices in parts of Texas. And please do remember that the NAT gas market is very regionalized. There's not one global infrastructure here. It's, it has become more global after the Russian invasion of Ukraine due to a larger build out of LNG infrastructure both on the receiving end and on the exporting end. But still in a situation where we currently have a very tight energy market, you can see negative NAT gas prices in parts of the US right? And overall if you look at the, say the input basket for necessities, so everything from NAT gas, thereby fertilizers, electricity, oil, oil products, et cetera. We are so far from the price spike that we saw in 2022. Even in Europe, we're so, so far from that. And the war in 2022 cornered at lock less barrels of oil a day than the current crisis. So it's quite amazing that a notionally much smaller crisis in 2022 had a much larger impact than a much larger crisis, at least on paper this time. So something is different. And I've basically spent my entire weekend writing up the thesis on why that is. And you can read that on Real vision.

C (17:30)

Absolutely. Okay, Andreas. So both a gloomy outlook that this could take a while. Neither side has any intention really, or incentive at least to push for an end to this conflict. At the same time, it's not the end of the world, that's what you're saying.

A (17:45)

So let me just say one thing, Miko, because it's also something to keep in mind every time we have these big geopolitical events, right? I think there's a discrepancy between the geopolitical risk and the impact of the geopolitical risk over time in markets, if you know what I mean. So the geopolitical risk is intact, but the impact on markets from a rate of change perspective is fading. So when I said around the first week of April that we would see a big rebound, and when I said two weeks ago that I considered the crisis to be over, I still stick to those words because from a market perspective, that's been 100% spot on, even though the optics of it look a little weird and or wrong, to be honest. When I said that the crisis was over. But I mean it from a market perspective that we've moved on as long as it kind of, of course, cannot drag on forever. But as long as there's perceived progress and they're talking to each other, et cetera, I don't think anyone's really worried right now, which is kind of odd, right?

C (18:53)

Which is really odd considering that they're not even meeting yet. But there's a feeling that this can be done rather quickly. There's a feeling that neither side has any interest in escalating things as well. We've heard that from the U.S. administration. They're not even talking about that. And that is a big step forward from three weeks ago, so. Absolutely, Andreas. So I just want to pull up this chart because it also shows in the advisor sentiment. This is one of the charts I really love. We've seen a very, very clear shift over the past few weeks. So have advisors adapted to this and is this warranted?

A (19:34)

So, first of all, I think the first conclusion here is that through February and March, both in the run up to the Iran war, but Also, during the first, say four, five weeks of the war, every advisor more or less panicked. Absolutely, or at least most of them did. So they started turning bearish. They probably sold parts of their clients portfolios, et cetera. And they turned bearish during that first window where geopolitical risk is actually impactful on markets. But they've been very slow to recover their bullishness despite the market going up. And remember, across the port we're out. Well, we are at all time highs. So the dark blue here should be at all time highs if the two were connected. Right, but they're obviously not. So another way of showing it is to just map market returns versus investor sentiment on page 13. And I don't think I've ever seen the kind of disconnect that I've seen say over the past 12 months or so. And it's been accelerating that disconnect between 1st of March and now. So we have the market going up and the overall sentiment from a momentum perspective going down. We also see it in the consumer sentiment, for example, it is at basically at all time lows while markets are going up. It's very, very rare to see this disconnect. And the way I see it is that this increases the probability of even stronger returns because it means that a lot of people haven't participated in this rally. And if you look at it, I'd like to show page 14 as well because I just saw this from one of the Goldman pieces out earlier. So thank you to Goldman for showing their numbers from their prime book. It's slightly small here, but what it shows on the left hand side is the gross leverage of the financial system in, in light blue. And it's been coming down throughout this crisis, basically meaning that funds that can use leverage, but also of course family, office, et cetera, they've used less leverage through this, meaning that they've probably net sold. Right. And if you look at the long short ratio, it's also come down on the right hand side here and it's still very low in a historical context. So it's not like the market is overly optimistic, it's not like the market is overly long. And the, the leverage, especially in net terms has come down a lot, but also gross terms over the course of the past eight weeks or so. So it also tells me that the rally that we've seen has been a low volume rally. It's not really been a rally that a lot of people bought into. And, and therefore if we, if we get the leverage on board this long side of the bend. Right. If we get the, the levered players to, to, to load up, basically you haven't seen nothing yet, if you know what I mean. So it's a very interesting schism this one that we have probably one of the most pessimistic periods over the course of the past three to four decades in sentiment surveys and solid returns. At the same time, this disconnect is incredible and it's only getting worse. So either this is, you know, a broad based symptom of tds, I hate using that phrase, but I guess you know what I mean that, you know, everyone's so focused on his rambling to the right, left and center right and all of his extreme rhetoric that they don't really look at the results and they don't need to look at what, what's fundamentally driving things here because by the end of the day, even though he's created some volatility, I actually don't think the underlying momentum is, is bad. So, so some of the policy initiatives that they put in place, they've actually done, done well. And, and most people tend to forget that.

C (23:26)

Andre, One of the sectors doing really, really well during this rally is obviously semis and we've used this, this, this South Korea chart earlier. Can this go on? I mean even intel reporting strongly here. Where's the roof for, for, for simis and, and this connect here.

A (23:48)

Yeah. So let's see whether we close in green today for semis. It's, I'm not sure at this stage. It's early in the trading day, but I think we had 18 consecutive updates up until Friday, probably returning roughly 50% in semis. So I mean it, it, it is basically the most incredible rally in semis ever, but it's also the most incredible demand side for semis ever. So this is the South Korean export number, but this is not the explicit export number for semiconductors. If you had used only the subcategory for semiconductors, the chart would have been through the roof. It's not like 160% or something like that year over year and never seen anything like it. Probably never will see anything like it again in growth terms. So it is very, very fair that semiconductors are through the roof. It's one of the most bizarre increases in the profitability and earnings cycle ever seen in tech. And I guess we'll get the first glimpse of whether the Max 7s will continue to buy into this. I'm of the view that you need to lean into this trade until, and let me stress until one of the biggest Max 7s decide to tell you that hey, we're going to scale down on capex and then it will be a very, very good timing to get out of the trade.

C (25:10)

So the most most important macro number this week might be the growth rate in Microsoft Azure, aws, Google Cloud essentially. Exactly because, because we need to see that the capex investments are warranted. It doesn't mean that they're making money but it means that, that the market is growing at the same rate And I mean, I mean address usually you have a time lag we've talked a lot about time lags here today and what you see you have a time lag of these data centers one to two years until they're up and running. So who knows what the, the demand picture is going to be in two years but it's, it looks like it's going to be big. It look like looks like we're going to be in the same position as today where we wish, everyone wishes they had put more into capex two years ago. So that might also be the answer that we didn't put enough into cap happen.

A (25:52)

So m another cliffhanger tomorrow. You know we traded first the GPU cycle. So I mean basically the brain of the data centers we traded the memory cycle very well this Ramageddon as it's been labeled Micron Hunx Samsung to some extent participated in that rally Sandisk not least then we had the photonics trade so basically the connectivity layer of the, of the data centers. But I think there is a big, big big trade brewing in power and I'll elaborate on that and, and how to trade it tomorrow. I mean I, I still think the overall semiconductor cycle is fine and you'll make decent returns but if you want those you know 5x returns then then you'll have to look at some of the niches that have haven't really participated in this rally yet.

C (26:46)

Yeah and very under reported story and I've read this for a number of countries in the, in the EU probably also relevant across the the US is that in most countries in the EU at least the, the grid operators, the national grid operators are simply refusing new plugins essentially it's a big problem here

A (27:05)

in, in in parts of the US as well.

C (27:07)

So yeah exactly that is on the report that is essentially rationing of electricity and I mean if you're rationing something it, it means the demand is is much much bigger than the supply. So so, so absolutely Andreas Very very interesting macro backdrop for that and we will look into that tomorrow. A little bit of a. We've talked a lot about Scandinavia this week. I know. But a little bit of a cliffhanger as well here. No, if you're situated in Denmark. We talked a few weeks back that we were are throwing a live show in Copenhagen. It was almost sold out very quickly. So we're throwing another one on the November 27th and we're also doing a show in Aarhus. So to those of you Danish or maybe Swedish people who knows who are watching this, go go check out our. Our profiles for links to. To. To tickets for that if you want to. To watch our live show. It's going to be more of this. Less charts but. But even more banter.

B (28:03)

Yeah.

A (28:03)

And you know, to be honest, Miko, I've. I've also said to Raoul and the management team here at Real Vision that we need to go global with this tour. So we haven't booked those dates yet, but let's see.

C (28:15)

No, yeah, let us know in the comment section where you want us to go. So there are some places we don't want to go, but feel free to suggest wherever we should. We should be headed. Anyways, guys, that's all we had for you this week. Thanks a lot for tuning into Macro Mondays here at Real Vision. We've got a great week ahead of you, ahead of us. So looking forward to see you on there. Thanks to you, you, Andreas, for. For joining us here and we'll see you all.