Ozan Tarman on What's Driving The Nonstop Rise in Gold and Tech

Summary

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Odd Lots Podcast Summary

Episode: Ozan Tarman on What's Driving The Nonstop Rise in Gold and Tech
Date: September 25, 2025
Hosts: Joe Weisenthal & Tracy Alloway
Guest: Ozan Tarman, Vice Chair of Global Macro at Deutsche Bank

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Overview

This episode explores the simultaneous, extraordinary rise in both gold and tech stocks, a dynamic that's been puzzling investors and economists. Joe, Tracy, and guest Ozan Tarman dig into the global market forces, investor psychology, monetary and fiscal policy shifts, and international currency dynamics that are driving asset prices. Ozan brings unique insight, combining client feedback from top institutions around the world with a candid take on risk, central bank policy, and the mood among professional investors.

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Key Discussion Points & Insights

1. The Unusual Dual Rally: Gold & Tech

• Traditional Theory Broken: Typically, rising optimism drives equities while fear lifts gold. The current market, however, features both rallying strongly.
  • Quote (Tracy): “It's not really supposed to happen... like you're not supposed to see stocks shoot up... while gold simultaneously goes up.” (02:08)
• Gold’s Role Shifting: Gold is seen less as a mere symbol of fear, more a store of value amid currency and sovereign concerns.
  • Quote (Joe): “When people are fearful... don’t trust fiat currencies or the governments... I understand why people want to hold this metal.” (02:52)

2. Why Gold Is Rallying

• Distrust in Sovereigns: Globally, central banks (e.g., Turkey, Russia) are accumulating gold reserves to reduce dollar dependency due to US political/geopolitical risk.
  • Quote (Ozan): “More and more countries are building up their reserves in gold, shying away from a dollar more.” (25:55)
• Uncertainty & Geopolitics: Ongoing global instability, sanctions, and political violence reinforce gold’s momentum.
• Parallel to Rate Cycle: Gold works “in risk on and risk off,” benefitting both when investors anticipate cuts or seek havens. (05:08)

3. What’s Behind the Tech Boom (Especially Nvidia & AI)

• Nvidia as Economic Engine: The firm’s AI-related CapEx has become so significant it might be “keeping us away from a recession.”
  • Quote (Ozan): “Nvidia is almost keeping us away from a recession. All that chip story, all the Capex spending. If it wasn't for that, maybe we could either question or be in a recession.” (06:24)
• Self-Reinforcing AI Investment: Circular flows (Nvidia, OpenAI, Oracle) fuel the rally, with even skeptics unwilling to pull back as cash flow metrics remain real.
• Magnificent Seven’s Global Pull: Tech titans are so compelling that international investors keep buying, often (now) using currency hedges.

4. The Weakening Dollar and Shifts in Global Flows

• Dollar Drop’s Importance: US assets may look robust but, adjusted for the falling dollar, global investors are hedging or reducing exposure.
  • Quote (Ozan): “All of the Mag 7 ... people want exposure... just don’t want to take the risk that [the] dollar ... is going to go down further.” (17:51)
• International Demand Hedged: 80% or more of non-US flows into US tech are now hedged, dampening the impact of new inflows on the dollar. (15:53)
• De-dollarization: Sovereigns and institutions gradually rebalance away from the dollar, impacting global macro structure.

5. Fiscal Dominance & Fed Independence Anxiety

• Nervousness on the Sovereign, Not Corporate Side: Investors see US companies as strong but view US government institutions with greater skepticism, driving gold and FX trends.
  • Quote (Joe): “...there's all this anxiety about the US as a sovereign... other countries have sovereign risk, they're just usually not home to literally the most impressive companies in the world.” (19:34)
• Volatility Falling, Paradoxically: Despite fiscal and Fed worries, bond volatility is at multi-year lows (MOVE Index), suggesting complacency (24:50).

6. Political Risk & Gold’s Non-Market Drivers

• US Instability: Political violence and institutional stress intensify gold’s appeal.
• Key Policy Events: Trade/tariff policy, potential rate cuts, and unexpected changes (e.g., US–China détente) could change gold’s trajectory, but currently no major shocks are expected to alter the bullish status quo. (27:37–28:01)

7. Tariffs & Stagflation

• Tariffs as Revenue: For the US, tariffs are as much about revenue as trade confrontation. Their effect on growth is contentious but hasn't derailed equities.
• Stagflation Camp: Some investors still fear tariffs could rekindle inflation and slow growth (i.e., stagflation), but data hasn't proven them right yet. (29:43–31:42)

8. Asset Prices & The Real Economy

• Growth Dependent on Rising Assets: The US economy increasingly relies on perpetual asset price growth to sustain demand and sentiment.
  • Quote (Ozan): “You need ... the next thing... American [economy] relies on growth, relies on animal spirits, relies on those asset classes to go higher and higher.” (32:37)
• Widening Wealth Gap: The wealth effect concentrates, with the top 10% driving consumption.

9. Europe & China: Contrasts and Connections

• China Rebounds in Unexpected Ways: Despite growth fears, China tech and RMB strength surprise consensus. China is also becoming a global gold storage hub.
  • Quote (Ozan): “They did become a gold doing a Switzerland.” (37:13)
• Exporting Disinflation: Cheap Chinese exports drive down inflation in Europe, potentially leading the ECB to consider rate cuts. (37:31–40:14)
• Tariff effects: Despite renewed trade friction, tariffs are currently lower on the market’s worry list.

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Notable Quotes & Memorable Moments

On Gold & Risk:

“Gold works in risk on and risk off... At the moment it works for a reason.” — Ozan Tarman (05:08)

On Tech’s Macro Role:

“Nvidia is almost keeping us away from a recession... If it wasn't for that, maybe we could either question or be in a recession.” — Ozan Tarman (06:24)

Global Investment Flows:

“80% of them are hedged. So people are buying their new Nvidia hedged. So believe it or not, 80% is a big number.” — Ozan Tarman (15:53)

Trust in Institutions:

“There's all this anxiety about the US as a sovereign... That’s the tension — all the investor nervousness is on the sovereign side, not the corporate.” — Joe Weisenthal (19:34)

On Policy & Financial Repression:

“Are we becoming a bit emerging marketized? What do you mean by Treasury and Fed working even closely together? ... So far those who bet towards that... did better on their long US views.” — Ozan Tarman (36:25)

China’s Surprises:

“Even though China’s growth has been slowing... if you look at something like the Shanghai composite, it feels like people are starting to get a little more optimistic.” — Tracy Alloway (37:16)

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Important Segments & Timestamps

• Intro, the Mystery of Rising Gold and Tech: [01:44–05:00]
• Ozan Tarman on Gold’s Current Position: [05:08–06:56]
• Nvidia & Tech as Macro Engines: [06:56–10:16]
• Market Structure and Global Flows Discussion: [15:29–19:34]
• Dollar Hedging & US Sovereign vs Corporate Trust: [17:51–20:06]
• Fiscal Dominance, Volatility & Fed Independence: [20:09–25:09]
• Gold as a Political & Geopolitical Hedge: [25:09–28:01]
• Tariffs, Stagflation, and Macro Impacts: [29:11–31:42]
• The Wealth Effect & Asset-Driven Economy: [32:37–34:00]
• US “Emerging Marketization” & Policy: [34:00–36:52]
• China Trade, Currency Strength & Disinflation: [36:52–40:14]
• Hosts’ Debrief: [40:54–41:45]

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Tone & Style

• Conversational, insightful, and sometimes satirical—matching the playful but incisive way Odd Lots tackles complex finance topics.
• Ozan Tarman offers a blend of data-driven analysis and informal observations from “roundtables” and client dinners, lending color and immediacy to the macro narrative.

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Conclusion

The 2025 market is defined by the concurrent boom in both gold (the classic fear hedge) and tech stocks (the epicenter of risk-on optimism), driven by unique macro forces: global distrust in sovereigns, persistent fiscal and policy uncertainty, relentless innovation in US tech, shifts in global capital flows, and complex geopolitical dynamics. Investors around the world are balancing optimism in US corporate giants with anxiety about US institutions, increasingly hedging their bets and diversifying into gold and non-dollar assets. As always, the real story is at the intersection of markets, politics, and psychology.

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Transcript

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[Joe Weisenthal]

Hello and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

[Tracy Alloway]

And I'm Tracy Alloway.

[Joe Weisenthal]

Tracy, Every day feels like stocks and gold go up. Every day, stocks and gold and stocks and gold. And it's just. It's relentless.

[Tracy Alloway]

I'll tell you what, it's good for anyone invested in an index fund and a bunch of gold coins that their dad gave them.

[Joe Weisenthal]

Yeah. Good for you.

[Tracy Alloway]

Yeah. Thank you.

[Joe Weisenthal]

The Tracy Elliot portfolio doing very well.

[Tracy Alloway]

Yes. No, you are absolutely right. And the big thing about this is it's not really supposed to happen. Right. Like you're not supposed to see stock stocks shoot up because of optimism about the future, while gold simultaneously goes up. Because gold traditionally is this sort of dour yellow rock, as you like to describe it, which usually signals something bad is about to happen.

[Joe Weisenthal]

I'm going to relent. I'm going to relent on something.

[Tracy Alloway]

Are you a gold bug now?

[Joe Weisenthal]

No. Well, I'm going to relent on something.

[Tracy Alloway]

Okay, here we go.

[Joe Weisenthal]

I admit that gold is a metal. This is my big cave. I always call it's no longer a rock. Yeah, this is my big cave. I used to say, oh, those yellow rocks. You know what? I'll acknowledge it's a metal.

[Tracy Alloway]

If it's a metal now, will you admit that it has industrial application?

[Joe Weisenthal]

Yeah, but they're very minor. And this is also. I will not acknowledge that there is a. It is mainly a store of value or perceived to be. And when people are fearful, when people are mistrustful and people don't trust fiat currencies or the governments and there's all kinds of reasons to be skeptical about the governments that issue paper currencies. I understand why people want to hold this metal that people have used as money for thousands of years.

[Tracy Alloway]

I'm going to take you back to the jewelry district in New York and get you more excited about gold again.

[Joe Weisenthal]

No, and I'll just say on gold, I loved it and I wore that big chain when we went to the diamond district. And I wish I had bought it, like, because now that's like my favorite grade. It was like $35,000 gold necklace. And today would probably be a 45 or $50,000 gold necklace.

[Tracy Alloway]

Imagine how much that diamond encrusted Furby would be worth.

[Joe Weisenthal]

This is the thing they don't tell you about gold, by the way, if you spend 10,000. This is my crank take on gold. It's not crank. If you spend $10,000 on a gold necklace, they give you a $10,000 gold necklace. Yes, it's free. They v. It's like you spend $10,000, they give you something worth $10,000 back. In a sense, it's a free transaction.

[Tracy Alloway]

No, you get two things. You get something to wear and an investment.

[Joe Weisenthal]

Yeah, you actually. Yeah. I wish I had had this realization when gold was like $200 anounce. But anyway, it took me a while.

[Tracy Alloway]

We'll make a gold bug of you yet, I'm sure.

[Joe Weisenthal]

So these are really exciting, wild times in the market. And the last time we talked to this guest was another wild time and an exciting time in the market. That was, of course, April. We do in fact have the perfect guest to try to understand everything that's happening all around the world in Global Macro. We are going to be speaking with the vice chair of Global Macro at Deutsche Bank, Ozan Tarman. Ozan, thank you so much for coming back on odd lots. Last time we talked to you, we were in London. This time.

[Tracy Alloway]

Thank you.

[Joe Weisenthal]

You're in New York, so thank you for coming to visit us.

[Ozan Tarman]

Very good to be in New York. I love to be on this show. I mean, honored to be invited again. Unga Mercury dinners. This is the highlights.

[Joe Weisenthal]

Thank you, thank you.

[Ozan Tarman]

And by the way, I was going to bring my United Amamin jersey. Dear Joe, really looks like him. And some baklava for Tracy, but couldn't find in the airport next time.

[Joe Weisenthal]

That's a good reason to do another future episode. Actually, we talked a lot about gold at the beginning, but I don't want to first ask about gold. Is Nvidia swallowing the entire US or.

[Ozan Tarman]

Maybe even global economy almost hand in hand, right? These two questions, I mean they both continue to go higher and higher. Actually, let me start with gold because you did, you did put such an intro in it. One of the very famous memes on the Internet caricature done maybe two, three years ago. This gentleman or lady running a big macro hedge fund looks around. I run very complicated products but at the end I buy gold. And these days that resonates even more, mentioned even more and more in these round tables in TV studios like this. Normally that jinx thinks, but it doesn't because at the moment it works in risk on and risk off. Last time you were around again, you called me at a very relevant time questioning US exceptionalism. I'm sure we'll go into that. What's going on with U.S. institutions. Those question marks, all those question marks against the dollar help. Gold FX is about stories against dollar. I'm sure we'll go into this as well. Some of the stories are now having a less easy time than people like to go into gold. And we may be going into a rate cut, period, cycle or not. Whether you're Miran or Hamac that differs but gold works in that as well. So for the moment I always feel enough when it's the top trade on TVs on my roundtables, I put the orange sign on. But at the moment it works for a reason. Now Nvidia. Yeah, I mean if you had this show a year ago as well, you could have said Ozan. As of this morning, one of my partners in success, Saravelos, his piece is already viral. He's claiming tongue in cheek that Nvidia is almost keeping us away from a recession. All that chip story, all the Capex spending. If it wasn't for that, maybe we could either question or be in a recession.

[Tracy Alloway]

I'm not sure he's saying it that tongue in cheek though.

[Ozan Tarman]

Agreed. And also others are joining him again. I'm hearing from my dear friends clients this very morning. Bain claims Yanla's revenues quickly catch up. With all this AI CapEx spent, we may be in big trouble. All of this will burst by 2030 and we'll go into recession before that. Now we can say a lot can happen before 2030, but warning signs are there. Last night's big headlines. The reason why again NASDAQ closed on the highs Nvidia investing into OpenAI that also becomes almost circular. I mean this is not Tonganjigi theory. Oracle invests in OpenAI, OpenAI invests in Nvidia back and forth, back and forth. Is this a closed circle? I hear a lot of skepticism also, mainly coming from those who haven't caught this big rally since a bubble is.

[Joe Weisenthal]

A, is a, is a bull market.

[Ozan Tarman]

That you missed out on.

[Joe Weisenthal]

I call gold a bubble. Tracy calls it a boom because of the difference and inherited a bunch of gold.

[Ozan Tarman]

Exactly.

[Tracy Alloway]

I should just mention we're recording this on September 20th.

[Ozan Tarman]

I like that. Right before, right before Powell speech, right before Trump's speech.

[Tracy Alloway]

So just on AI and the sort of self dealing circle ish circuitous relationships. Perhaps one of the reasons we like talking to you is because you talk to a lot of clients and so you hear a lot of feedback from the buy side as well. What are people looking out for in terms of saying okay, this is a bubble? Because it seems like all right, people have been talking about high valuations for a really long time. The stock just goes up. Is there something else that people are like watching for, in which case they might say actually we're going to start cutting back positions.

[Ozan Tarman]

Excellent question. Almost like two months ago I was hearing more. I'm skeptical. But flat cuts are also coming. You can't fight this now, especially from the pros who've been around 90s and beyond. I do hear, look, this does feel a bit like end of 90s beginning of 2000 by the way. The year you pick is very important there, but we may still run. That's one thing that more seasoned equity beyond macro pros are saying. I also it was a bit the beginning of my career but I was around in late 90s, early 2000s then the denominator almost didn't exist in this valuation discussions. There was hardly any cash around. Everybody stuck. Joe.com is excellent in B2B, even better in B2C. And you know of course hindsight is the world's top hedge fund but you could feel it. Whereas this time around you can question the hundred billions thrown around in a circle but you cannot question much the revenue, the cash. Jensen Nvidia OpenAI is bringing to the table. You cannot question much. Let's go beyond Nvidia a bit into magnificent seven. Microsoft, Apple, Alphabet, they have customers. All of us are their customers. They make money. And in a way talking about circle more positive way of more glass half full way of looking at it. Nidia is the big champ. Okay, but take Nidia aside. All of a sudden Oracle became a story for a reason. From Oracle we go to Alphabet because for this time around judge decided favorably on Chrome. The story continues moves from one asset to another.

[Joe Weisenthal]

Also.

[Ozan Tarman]

Yeah, Nidia is doing great. We'll talk about how NASDAQ the Hercules is catching up with my blue hat Mega. But it's rally spreading. Nvidia is not the top stock in S and P year to date. Talking about waiting for Godot. Finally, small caps rose up since the famous now Jackson Hole. Another famous Jackson Hole Bowish speech. So it's not just one guy is very important. November 19th Nvidia earnings are very important, but it's not just one stock.

[Joe Weisenthal]

By the way, Ozan was regaling us or showing off his make Europe great again hat and it's signed by Mario Draghi. If I owned I'm very jealous. I would not be carrying it around. I would be carrying it in a glass case and selling it maybe for ebay.

[Tracy Alloway]

Oh, you'd have it in the vault along with your gold coins.

[Joe Weisenthal]

I would have it in the vault along with my gold.

[Ozan Tarman]

But I, I respect how much I respect my clients. I want to show before we go.

[Joe Weisenthal]

Further, actually, for listeners who maybe didn't hear previous episode with you in April, can you just give us a little back? You talk to everyone. You, you have these dinners. It affords you an incredible perspective on what a range of people on the street are thinking about. Just so that people can understand your perspective and where you're coming from. What do you do like on a day to day basis, who are the range of people that you talk to and how do you interact with them?

[Ozan Tarman]

My job is to talk to my bank's top institution clients, hedge funds, hedge funds, real money. But also because of experience, talent, relationships going deep. This also includes now sovereign wealth funds, key private banking institutions. And I love, I'm, I'm as you know, I'm a person who tries to bring things together. So in these roundtables, small or big. Yeah. It's not just hedge funds. It's not just real money. It's not just foreign wealth funds, all asset classes, credit rates, fx, emerging markets, my proud terroir, equity of course. So they learn from each other as well because we talked about it in these shows. An equity perspective can be very different to a race perspective right as we speak. Again we are in one of these doldrums on if you define macro just as rates and effects, it's almost like a magnet. 412 okay we try we on us 10 year we tried below 4% 412413414 as Tracy said, we are recording this on September 23rd at 9am in three hours Chair Powell will speak. Let's see if he changes tone or sticks to his so called hawkish presser. Some people hope that may again ignite a little bit of other stronger rates, higher tone. Otherwise volatility in effects and rates are struggling. Meanwhile, equities continue to better and better. And back to your question. Different sets of clients coming to my roundtables, coming to my realm. Learn from each other on why different assets classes act different.

[Tracy Alloway]

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[Tracy Alloway]

Mentioned the dollar just then and of course you have a very international group of clients that you're talking to. And can we talk about the dollar drop this year? Because I think it's really important and even though it gets some attention, it's nowhere near enough because we're talking about stocks rallying. US stocks rallying. Things look a lot different when you start to adjust for currencies. How are people thinking about US Assets in light of the dollar drop?

[Ozan Tarman]

Very fair. I'm Team Odlo so I also remember last time we met is April 16th in London. So just a week before the big fear EURUSD was right around 110, 111. We were beginning to sense that this could be a historic year in terms of this de dollarization hedge fund ratios changing but we swiftly moved beyond 1.15 as well. Now looking at the picture, two things are very important. First of all the flows back to our friend Nvidia back to our friend Magnificent seven. Because one pushback from some of my especially fast money friends who or either smell, want or wish a dollar squeeze after such a soft dollar move is what will the flows do? World continues to buy Nvidia's and Microsoft's do they buy it hedged? So I was a little bit skeptical on that. By the way flows are back so a big difference to April 16th. We can talk about that as well. Retail late rally. Look where we are all time highs. My research reports and claims again George Servalos that in the last recent 30, 45 days or so those flows almost 80% of them are hedged. So people are buying their new media hedged. So believe it or not 80% is a big number. Say it's 70, say it's 60. That definitely helps the soft dollar side of things. What continues to help is of course institutionals decreasing their exposure to us. Like hindsight. I said rightly on that April 16th nothing to end the US private side exceptionalism. Nvidia's Microsoft so far are fighting back the threats of deep sea even though champion of the year is China tech in terms of performance. But from Asia to Nordics, big big Funds are reducing their dollar exposure a little bit. 70 to 65, 60 to 55. That's makes a difference. That made a difference.

[Joe Weisenthal]

This is really important. I think we should just continue on this specific line because what it sounds like is all around the world you have to have dollars to buy Nvidia. Nvidia is a stock that's sold in dollars. Its profits are denominated in dollars. It's sales, it sells things in dollars. And that's the same for all of the Mag 7 including Microsoft and Apple. And all of them are doing phenomenally well. They have real profits, real earnings and so forth. They, they're very excellent businesses. And it sounds like basically all around the world people want exposure to a handful of extraordinary US companies. They just don't want to take the risk that that denominator, and this time we're not talking about earnings but that, that or that the, the dollar that they trade in or sell in, et cetera, is going to go down further. So they want everything about this, they just basically don't want the US sovereign exposure that's connected to these American domiciled companies.

[Ozan Tarman]

Completely correct. And honestly I was a little bit skeptical. I wasn't sure if you told me Ozan this year this big surgeon back in Nvidia, Microsoft won't happen then I would feel even more comfortable with the short dollar position. But Magnificent Seven roared. It may even pass Mega despite that dollar is also remaining soft. So whether I was skeptical or not, what you explained is happening. But I think for the next legs, ours included, a lot of buy and sell side are calling for 120, 122 like levels you need. Now the European side of the story or whoever you want to talk about, Japan, China, the laggard side of the story, FX is too late. We talked about why dollar side of short dollar worked.

[Joe Weisenthal]

Yeah.

[Ozan Tarman]

We need now a bit more help from our European story.

[Joe Weisenthal]

Tracy, you know what strikes me as interesting about this, which is that when we think about countries where there's political risk and so forth, we don't often associate them with the most impressive enterprises in the world. And it strikes me that that's the tension we're talking about here, which is that there's all this anxiety about the US as a sovereign for all kinds of reasons. That's not unusual. Other countries have sovereign risk, they're just usually not home to literally the most impressive companies in the world.

[Tracy Alloway]

No. And it is true that most of the investor nervousness around the US has shown up on the sovereign side.

[Joe Weisenthal]

Yeah not the corporate side rather than.

[Tracy Alloway]

The corporate side which we've been writing about in the Odd Lots newsletter which.

[Joe Weisenthal]

Everyone should subscribe to at Bloomberg. Yes.

[Tracy Alloway]

Seamless plus plug just then. Okay One of the other I guess big questions about the market right now is there's clearly nervousness about fiscal dominance and Federal Reserve independence and that is playing into the drop in the dollar too. And yet at the same time stocks seem to be taking off and a lot of investors don't seem to be that nervous at least on the equity side. What accounts for the discrepancy there the.

[Ozan Tarman]

Two different roles talking about plugins. I also love the New York Times piece I think you guys deserve all the trust me all those transcript they listen they get very excited when I'm on now Tracy definitely hit the right point De dollarization is one key big theme going into the end of the year fiscal dominance or not and the famous Fed independence those are my second and third key topics by the way where are tariffs all the way down.

[Joe Weisenthal]

To four I forgot about those fiscal.

[Ozan Tarman]

Dominance so we talk right? I love brainstorming with you guys Remember what I said in August as well summer everybody was everybody like some key investors especially fast money were gunning for from my dear island four key trust moments in four countries at the same time what does that mean? I mean trust moments we sadly know what I'm talking about long yen is getting out of control for people's for.

[Joe Weisenthal]

Markets big fiscal US UK Japan was.

[Ozan Tarman]

The fourth for the right reasons Europe boomed for the right reasons because ramp up the German spending will come at the end of the at the end of the year etc. Some key investors were asking well one trust moment we know how we handled Chancellor then prime minister goes different sets of policies what happens if four goes at the same time and we tried this on Talking about dates September 2nd when you guys came back from wherever you came back from on the long final long vacation long weekend UK guilds big move followed by France because the prime minister was about to go in six days joined Tracey how long did it last? Four hours that long and sell off lasted four hours and I'm not trying to be funny Basically since then US 30 years Europe even UK has been much more under control up until the hawkish presser almost threatening below 4% and even more than short dollars Tracey over the summer and into fall what were the real money and hedge funds common favorite trade steepness steepness steepness Europe us everybody and their brother had steepness first for different reasons on US more due to the short end that sooner or later we'll come to the Fed independence. The Trump side of the equation would win more. Finally Powell would cave in, cut would come in and on the European side even more popular because of the long end German spending coming through in October, November and people believed in their steepness first us got hurt. Two NFPs missed long end moved big flatteners hurt gold aside whenever you say or Nvidia aside whenever you say somebody says a trade is untouchable watch out you European steepness were supposed to be untouchable. Two days after that flattening washout in US Europe also got reduced and since the Hovkis presser we are more balanced onto Fed independence again. Just this morning of the press, Matt Raskin, my head of US Rate strategy previously from the Fed very respectable analyst wrote about this Fed independence fear not being in the price, not in the breakevens, not in the term premier. Why? I think a little bit, because so far, let's dive right into it if you wish. I think this cut is justified in my mind. Even if they cut 50 a week ago, it could have been justified. Talking about some dear clients, friends, public. So I may say Rick Rieder publicly on TV and on his writing said they may and they should cut 50 because I think if they sold the revisions in June and July, they probably would have cut in June and July and going forward, okay, they cut 25. Not only they cut 25, Mehran did his thing, probably that, that's the dot. But Waller Bowman stuck to 25. Even some of the previous Fed governors racing for the job. Bullard says they should have done 25. So people are thinking and hoping that there is still some Fed independence. Powell, even though he's the past man, has some control over the situation. That's why we're not getting any Fed independence. We're on the long end.

[Tracy Alloway]

Joe. It is interesting and I would not have expected this earlier in the year, but if you look at the MOVE index, so the index of bond market volatility, it's going down. It's gone down quite a bit, which is not exactly what you might expect to happen when we're talking about things like fiscal dominance and Federal Reserve independence. But there you go.

[Joe Weisenthal]

That is a good chart I haven't looked at in a long time. I want to go back to the gold conversation because we kind of been dancing around it. We're like, oh, political volatility in the US and sovereign risk in the US et cetera. But let's talk about gold in the US or gold in the dollar. When you talk to clients setting aside that it's a good trade, people want to ride a good trade, et cetera. How much fear, anxiety, et cetera is there about US Political stability and what are the and I mean a prominent political commentator got assassinated recently in the United States.

[Ozan Tarman]

Sadly.

[Joe Weisenthal]

What are people at your dinners, maybe inside the US or outside dinners saying about the US when they look at our country.

[Ozan Tarman]

That's why more and more countries are building up their reserves in gold, shying away from a dollar more. My motherland Turkey is an example again publicly known in terms of reserv. Also let's remember what is still going on versus Ukraine and Russia, the sanctions that Russia has faced or may face. So different countries are also because of that leaning more towards gold. So besides our macro discussions, ups and downs of rates, that uncertainty, that question mark over U.S. policy, that question mark over geopolitics lead central banks to accumulate more gold. Joe for gold to go down, the game should change. Like this year my game plan is going all right again. I was on air I thought these big sip and error trust moments long and crushing everything wouldn't happen. I didn't expect this much of a comeback but again I said there would be a comeback especially retail much more than pros believed in this n media gold go hand in hand together. There should be something off the left field for example maybe on tariffs all of a sudden tariffs tongue in cheek Tracy are a bit the good boy revenues they raise a lot of revenues. Twitter Talks about it, TVs talk about it tons talks about it if Supreme Court at whatever time and that's also very key when when they make the decision votes against I'm sure they may I I know they may use S301 etc but will be all of a sudden a big that's the question mark now what will the Trump administration do? What will be sent to what long ends can get going again and even though it's got nothing to do with necessarily Nimidi and gold, the year's path may change and things like that can take us off the what about a.

[Joe Weisenthal]

Big handshake with Xi Jinping and a new I mean I don't know what it would be and you know my dream obviously is for a BYD factory in Tennessee one day, a Xiaomi factory et cetera. But could that be a oh this charts us in a new direction. Something that is like a real let's reset this relationship. I'm not optimistic but would that be the type of thing that could reset the trajectory of certain markets?

[Ozan Tarman]

You talked like my Joe. I like it. Globalist Tennessee Factory BYD I mean that's not the Unger pulse at the moment but sure if that happens my gut feels still says short lived correction. But yes that's that. What did I say? That's not the Ungo pulse. That's not the New York pulse at the moment. It would be a positive spice, a little bit less scared of things to price and yeah I could see that hitting gold.

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[Tracy Alloway]

Number four on your list now, but we should talk about tariffs a little more and I take the point that it could be a revenue generator for the US and maybe that provides some support on the bond side of things. But on the other hand I think most people would argue that it would slow economic growth, which should be a drag on the equity side, but we haven't really seen that. How are people talking about the actual impact of tariffs right now? And I gotta say Joe, I got my first customs bill over the weekend. It wasn't too bad. I think it was like $16 or something. But they're here.

[Ozan Tarman]

I feel them personally very fair comeback I guess especially fast money crowds hasn't necessarily given up on stagflation. My take part of the reason why all these Nvidia gold long and calls have been correct. I like to fade the inflation hoax and I like to fade the big recession bears who are much more quiet these days anyway. But yes, if President Trump continues to stick to them even though on one hand they generate revenue and keep the long end under control, there may be a growth impact on the other side accompanied by supply side immigration effects. And the jury is out there on Dear Mr. Waller, whether led by him, whether this is the famous word t word, whether this is transitory or not. More and more some clients start to say my binky, the famous chief global economist start to say maybe this tariff effect wasn't as bad as both on growth side and on inflation side these people immediately get a pushback. Early days, early days. Let's wait. So will companies Continue to eat them and not pass that much to the traces of the world to the customer. Especially when we talk of beyond 10% tariffs which most countries face next year your country faces a very key midterm elections. So I think Trump and Bessant know that they got elected because of inflation. So the moment the stagflation camp starts to look like they are proving correct, even look like a bit of a climb on inflation, more slowdown on growth, I think we may, we may get more and more taco because they want to win those midterm elections, then they will take more and more steps lower on tariffs. But if they prove correct, if it's not reflected on the customer, if inflation continues to remain. Okay, I know it's not 2% but below 3%, maybe this status quo continues.

[Tracy Alloway]

Sorry, did you just call Binky Chada My binky.

[Ozan Tarman]

Even like when we. There's a lot of preparation going for these macro dinners as well. Trust me, when he sends his questions and his key bullet points, he tells me to start with my Binky.

[Joe Weisenthal]

I don't think we've ever had him on the podcast. No, we should. We got to should. Yeah, I talked to him a couple of times on tv. Big fan of his. We gotta make that happen. When you think about the US economy and maybe the European economy too, but I think it's the US and you think about growth prospects. This is something I've been asking a lot of people about, like how much do you think the US economy as a just the forward momentum of the US economy, especially over the course of your career, how much has it become dependent on this perpetual rise in asset values? And you think like do we need a booming market year after year just to keep that sort of like consumption, demand engine, investment engine going?

[Ozan Tarman]

Well, yes, is the short answer. I think the details are even more complicated and a bit sad. I think you need you we need in this game that it thing it the next thing it was B2B B2C three decades ago, 3D now of course AI AI AI past three years and also us. I mean again the country that gave my education right in more open times for that relies on growth, relies on animal spirits, relies on those asset classes to go higher and higher. And that's why the Tracy question from like 10 minutes ago is very key. Whether we are at you know, we're getting there stage of the bubble or we're at the bubble. Because if that bursts economy can get affected as well. Also Joe, I'm a big believer in the K Economy, the whole terminology of that. So I said this again before on your shows world may be more okay for whatever we define ourselves as. 1%, 5%, 0.1%. There's a much bigger part who are struggling definitely on us, but globally as well some again it's a statistics thrown out there these days. 10% of the US consumers accumulate almost 50% of the consumption and the rest much less wealth effect is getting bigger and bigger. When I was in college running around in this country again we were talking about the wealth gap. But now this becomes relevant, even macro relevant. That's why people like me are okay with the rate cuts, risk management or not.

[Joe Weisenthal]

When you encounter Americans in London or Americans in Europe or anywhere outside Englishmen in Europe, do they badmouth US policy? Do they like talk about how terrible and how much our institutions are deteriorating and how we need to get back to that sort of good old fashioned IMF orthodox economics of the good old days.

[Ozan Tarman]

Okay, let me get the pass from Kobe and do a bit of a shack look. They do. It's somehow especially if they have like me born and bred emerging markets, but now trading the whole wide world and if they are Americans touring my, my beautiful beautiful world, they are affected like when they hear conversations like this, they understand when they traded Turkey, Hungary, Argentina and say okay, because of this politics, financial repression, I don't believe it. That's why I'm selling the currency. It was easier to do for somebody else's land and currency.

[Joe Weisenthal]

Yeah.

[Ozan Tarman]

Now both. It hurts them a bit and also it becomes a bit of a dilemma. Right. They may continue to criticize some of the things that are going on, but for the arguments that I laid out, risk parity, at least the equity part continues to do okay. And us 10 years still is not going to 6%. It frustrates them. This brings me to not in the in our big, big ones, but big thematics a key point going forward much beyond the fourth quarter. What's going to win the trust moments. My symbolic way of saying fiscal dominance or financial repression. Again, as somebody who's experienced in these Turkeys, hungaries, Argentinas of the world. What does dear Mr. Bessant say? Is a former client? Friends tell a friend, bending the curve. He literally said I'll bend the curve. We will take care of the curve. You know, he said bend. He will not take care of. Maybe through like they do, being very watchful over the auctions, making sure auctions go very well, which they have been one tips auction aside, maybe through buying much more on the short end, vice versa. Buying more on the on the long end to make sure that those rates stay under control. Operation twist a la 11:12 they may win over majorities. Thought that fiscal dominance will win. My gut feel continues to say don't necessarily bet against whether you like it or not, Fed and Treasury working more closely together on this a la US financial repression. Going back to your question, some clients Americans I meet in New York, London or Sao Paulo are a bit taken aback by saying are we becoming a bit emerging marketized? What do you mean by treasury and Fed working even closely together? This is not 2008, 2009 but so far those who bet towards that, those who bet with Mr. Betsent did better on their long and US views.

[Tracy Alloway]

Speaking of the wide world, what are your clients saying about China in particular? Because you know I'm looking at a very good Bloomberg story on my screen right now. China floods the world with cheap exports after Trump's tariffs and I think they just posted a record trade surplus.

[Joe Weisenthal]

And there was another good article this morning, China wanting to be a gold storage hub which I thought was really striking.

[Ozan Tarman]

He did become a gold doing a Switzerland.

[Tracy Alloway]

Yeah, yeah and the freeport. But on the other hand, you know growth has been slowing in China and there is deflation but if you look at something like the Shanghai composite, it feels like people are starting to get a little bit more optimistic. What are you hearing?

[Ozan Tarman]

Three parts to that. First of all China as an asset class we have it here as alongside gold and emerging markets champion of the year in December, November, January earlier everybody and their brother a bit like this, not a bit like the steepener trade of this August early September it was the top trade going long $C and H these tariffs lighthizer they would be the toughest on China. There is no way all the $C and H calls were bought starting with seven and a half strikes at eight. All of that didn't materialize. Okay we didn't go to 690, 680 but the CNH is appreciating talking about the day we made April 16th on April 9th the big fear was on that morning when we questioned the system April 9 morning China would devalue big time big bang. They didn't do any of that. And currently my head of Greater China Trading Tan who namedrop nicely called this China tech and CNH rally thinks that and with his research RMB strength has more legs to go because wherever they go around the world, Peru, ports, Brazil, Amazon forests following the China corpus back to our discussion These guys are full of dollars out of their ears. And now for discussions for the points that you mentioned. They want to hedge a little bit so they want to sell their dollars a little bit. And that's a big factor. So that's. I think China Tech will continue to be the champion asset class. Gun to my head maybe not going to 690, 680, but I am still betting with CNH and RMB strength over dollar strength. One of these laggards of the year will do better to the world effect. You guys. Actually Bloomberg had a great piece this very morning like Tracey said on exporting disinflation. So two big countries in this, in this world are American are China. Mr. Trump is doing what he's doing on the tariff side. These other big countries of the world don't necessarily fight with the other big giant in the world stage. So those cheap cars are coming into Europe and beyond and that is a macro factor. Why? Because ecb back to blue hat now they're done. Madame Lagarde very defiantly says they're done for now. Madame Schnabel for now is winning the discussion. Even Lane is sounding a bit more like her. More hawkish. Let's see. They don't we maybe we don't have an inflation problem printing below 2%. If anything, my Mark Volt, chief European economist thinks it may go lower to 1.6, 1.5 if that happens. Let's see what their tone is come December, come January if this China continues to export to disinflation. Maybe even though they don't say it now, they may have to end up cutting. So that that's a big factor for the European story.

[Tracy Alloway]

Joe, we should have asked Ozan to wear his Europe hat for this entire interview.

[Joe Weisenthal]

I know, it's a cool hat. Ozan Tauruman, vice chair of Global macro at Deutsche Bank. Always a pleasure meeting up with you. Always seems to be at exciting times in the market. Also we like talking to you because it's just a list of Deutsche bank analysts like oh yeah, we need to talk to that guy. We need to talk to that guy.

[Ozan Tarman]

Part of my job. Bring them.

[Joe Weisenthal]

Yeah right. I no good sales. Anyway, thank you so much.

[Ozan Tarman]

This was great. Thank you so much.

[Joe Weisenthal]

I love catching up with Ozan for all kinds. Always really fun. He has a great read on one of the popular trades.

[Tracy Alloway]

Oh for sure.

[Joe Weisenthal]

Right now. And.

[Tracy Alloway]

Or just the talking points. Right.

[Joe Weisenthal]

And the talking points. This idea that you know we, we don't talk about the Chinese market that much in terms terms of the stock market, we do a little bit. But the idea that from his perspective, Long China is up there right now with all the big ones, Nvidia and gold, and up until recently the steepener, maybe that's fallen off a little bit because it hasn't worked as well that this is one of the sort of top tier consensus trades right now. Something that we should probably talk about further.

[Tracy Alloway]

I also find it interesting that tariffs have fallen from like number one on the list of concerns to like number four, if that.

[Joe Weisenthal]

No, that's totally right. I mean, when we, when we talked to him, that was middle of April.

[Tracy Alloway]

Yeah.

[Joe Weisenthal]

In London or early April, I think. And so it was all about tariffs. And yet despite the fact that tariffs are not top of mind for a lot of traders, apparently right now, it is interesting that still this idea to. We don't really want to have exposure to the US Per se. We want to have exposure to US companies, but not the US Per se. That's all part of the story.

[Tracy Alloway]

Speaking of which, another really good chart to look at right now is gold versus real rates. So you can bring up like tip yields or something like that. And you can see there used to be a really strong almost one for one correlation and that's broken now.

[Joe Weisenthal]

That's very interesting. Right. Because it suggests that there's something else going on. Right. Because it's very easy to say, okay, real rates, et cetera, they're going down. You want to like.

[Tracy Alloway]

I think it's that sovereign concern.

[Joe Weisenthal]

It's that sovereign concern. It's like something deeper and it may be deeper to a lot of different sort of, you know, Western governments and fiat currencies and so forth. A lack of trust, maybe something that doesn't show up in a traditional market, showing up in gold. I do think that's really important.

[Tracy Alloway]

Yeah. All right. Shall we leave it there?

[Joe Weisenthal]

Let's leave it there.

[Tracy Alloway]

This has been another episode of the Odd Lots podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.

[Joe Weisenthal]

And I'm Joe Weisenthal. You can follow me at the Stalwart. Follow our producers, Kerman Rodriguez at kermanarmondasho Bennett at dashbot and Chris Kale Brooks. And Kale Brooks. For more Odd Lots content, go to bloomberg.com oddlots we have a daily newsletter and all of our episodes and you can chat about all of these topics 24. 7 in our Discord Discord GG oddlots.

[Tracy Alloway]

And if you enjoy Odd Lots, if you like it, when we get a read on what people are talking about in markets, then please give us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can look listen to all of our episodes absolutely ad free. All you need to do is find the Bloomberg Channel on Apple Podcast and follow the instructions there. Thanks for listening.

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