Global Trade Rewired | Macro Mondays (July 07, 2025)

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2:27Hello there, welcome to another edition of Macro Mondays. Mondays. It's that time of the week again. My name is Mikkel Rosenwald and I'm joined as usual by my co-host Andreas. Welcome to the show Andreas. Thanks very much Mikkel. We have a great show for you guys today. We have lots to talk about. Non-farm payrolls, inflation outlook, trade deadline coming up, oil production hikes, lots of great stuff to talk about. Also a new take on the banana zone, but we'll get back to that Andreas. first of all let me remind you guys that this is our free show at Real Vision we're also doing a lot of publications and articles and shows behind the payroll you have to be a pro subscriber to that so check out realvision.com for options on that bear in mind however that although we aim to be as actionable and accurate and thorough in our research our trade ideas as we say every week might be sometimes it may be good sometimes it may be shit there we go okay andres before we before we get to the show here uh some big news on our end uh we've been a part of real vision for quite some time now um but now we're taking it to the next step uh we're moving in together with real vision uh we're we're entering a sort of a joint venture we're moving all our um operations to real vision this will be the place to go to find all our research and publications in the future.

3:55Really excited about this. Andreas, could you just put a few words to it, what people can expect? Yeah, you know, we've been friends with benefits for a while with Real Vision, and now we're getting married in a sense. So we're basically moving our entire research offering to the Real Vision platform. So it is the exclusive place to find us going forward. and we've had very fruitful discussions with the Real Vision team ahead of this. We're very keen on joining the Real Vision family as we've now officially done and you should expect our research offering to grow a lot. I think we'll have a lot of synergies with the existing Real Vision research team and by all means, this is going to be a great addition to the research offering already existing there.

4:46And yeah, I cannot stress it enough. The Real Vision platform is where you'll exclusively find our content going forward. Absolutely. Just as a little service note here to existing customers of ours, please check out our website, stilandresearch.com, for more details on how to make the transfer to Real Vision if you're not already part of that. If you have any questions, please reach out to us via the form in there. So great stuff. we're going to be doing even more on Real Vision. That's always a real pleasure. Andreas, we have a lot of ground to cover today. I want to jump in with the chart you just sent me on Swedish inflation for June, actually.

5:26They're very, very quick over there to get the numbers out of us and understand it. What are we looking at here? And why is this relevant? Well, first of all, I always like to bring in some input from our neck of the woods. So Sweden is obviously just across the bridge from where we're located in Copenhagen, Denmark. But I think the reason why Sweden is so relevant is that Sweden is, first of all, a very agile economy. It's kind of the most open trade-orientated economy in Europe. In a sense, it's kind of the South Korea of Europe. South Korea is also a very open trade-minded economy in Asia. Singapore could be another example, right?

6:06But these small economies with a very swift impact from global headwinds or tailwinds, they often offer some early clues on what to expect from the rest of the world, maybe, say, also six weeks later. What you have here is a snippet from the Bloomberg terminal taken just a few hours ago. the Swedish inflation number from June was out this early morning European hours. And it was a shocker in many ways. I think most Swedish officials had expected the inflation number to behave in many ways. And it didn't. So if you look at the month-on-month inflation, we're talking 0.7 % on the month if you exclude energy, which is, frankly, way, way, way too high.

6:59And this is maybe a couple of weeks after the Rix Bank basically said that they found the inflation outlook to be much more under control. They basically turned the page on inflation in many ways and also communicated that they could see more cuts upcoming. And if this is a precursor in any ways what to expect from goods inflation and core goods inflation around the world, it's bad news for those hoping to see inflation behaving. And to some extent, I actually think Jay Powell popped the champagne on the back of this because this is exactly what he's been warning us about, right? core goods inflation going higher in response to tariffs, in response to the shipping malaise that is now back on the radar after another attack in the Red Sea over the past 24 hours and all that.

8:02I'm not sure I'm that worried, but you should just bear in mind that there is a re-inflationary impact to be expected when growth re-accelerates, as is probably the most likely scenario here, as we've said over and over, now that we have a reopening of global trade and fingers crossed, no more obstacles due to tariffs and all of that. So I think inflation will rebound alongside growth and alongside liquidity. And that's typically what I label an up, up, up macro regime, meaning that both commodities and equities will go up in tandem in such an environment. And I think we got confirmation from Sweden about that.

8:42Yeah, still very visible, the effect of the low oil prices, especially on a year-to-year basis, 0.4 % effect on that. Okay, we'll get more into many of these aspects, Andreas. Let's move on to some of the laughs of the week. We tried to have a couple of fun memes, et cetera, here. This one is the Elon Musk tweet of the week. I mean, I don't know what to say about this feud reigniting. Obviously, always referring to the Jeffrey Epstein. I mean, some investors are talking about pulling out of Tesla. And others, Elon is, first of all, waging a war against the sitting president. Secondly, throwing his time back into politics.

9:23To be honest, I have a lot of sympathy for that because at the end of the day, he only has 24 hours in his day as the rest of us. How many projects can he go about? Is he going to get thrown out of Tesla? What do you think, Andrew? I mean, so first of all, remember that very viral reel with an entrepreneur stating that he's got three days in a day because he separates a day in three times eight hours. And that was kind of his life hack. So maybe Elon does the same. I think that was one of the more esoteric life hacks. Never mind. You know, this is obviously something that is back as a theme after the big, beautiful bill was passed last week.

10:05And Elon is obviously mad at the existing parties for voting the bill through. And he's been very vocal about campaigning against Republicans voting this through Congress. So that is the whole backdrop behind this hilarious tweet. I don't know whether it's that hilarious, to be honest, but the point here is...

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11:24Plus 500. It's trading with a plus. Michael, the America Party, at least it's officially announced from Elon Musk now. But I'm not really. Of course, he can never run for president. No. And I'm not sure who's willing to pick up the baton. I think that's how you put it in English, right? You know, who's willing to run that project, especially given how volatile Elon has been lately, right? It's not an easy task to be, you know, put in charge of that project. So do you even think it stands a chance in this party, Michael? No, because it's, I mean, the Republican Democratic Party, that whole structure is so deeply rooted in American system.

12:09Remember, this is all the way down to local sheriffs in small towns to school boards are being essentially this this this this by party dominated by that. So so it's it's very, very, very hard. If anyone can do it, it's probably not. But but and it's it's probably going to be a matter of him getting a couple of people elected across across the country. To be honest, I think he would be much wiser to spend his time on something else. But it's it's admirable. And at least this shows to me that the entire Elon going into government thing was never that calculated or was never really a business move because then he would have stuck on.

12:45I mean, this is right now where we're finalizing all these trade deals. This is where he was supposed to bring value to Tesla. And he's waiting an open war against the president. So, yeah, I don't know. It might be time for Tesla to move on. I don't know. It's fun to watch. Another fun one, Andreas. You sent me this. just as Trump doing a Joe Biden move, essentially, calling the Japanese prime minister Mr. Japan. I think we should stick with that, Mr. Denmark over here. That's a great one. Let's get to some of the hot takes of the week. And admittedly, they are also in the laugh category, perhaps.

13:25This one from the... This is the new banana season. this is Ethereum against Bitcoin over the past 10 years or so I think the prediction of old season so any analysis on the forum? No, I don't have a lot to add outside of this being an amusing technical tarot obviously but I think we're kind of still waiting for the PMIs to pick up speed in the US I think we're maximum three months away from that so I still think there is an old season upcoming but the penis zone is one that we have to admit that we're in right now. If I'm to be appointed a subject matter expert here, I can guarantee you that it will be a short penis zone.

14:12That's all I have to add. Not an erect zone. Okay, let's move on to Dresd. This is getting out of hand. Should we talk a little bit about the July 9th deadline that we're getting close to, Dresd? there was talk of 90 trade deals in 90 days. We haven't really gotten that. You could argue that we've got a few. We had some sort of pact with Vietnam, some level of understanding, memorandum with the UK, some sort of truce with China. Now the talk is that Trump is signing letters, a very, very big letter presidency of obviously announcing tariff levels in certain countries. But then a new deadline is emerging.

14:58We always have a new deadline, August 1st. What's this all about? Well, I don't know. Is this the deadline? Is it not the deadline? My best guess is that if they see some progress, then they're not going to use this as a firm deadline against the big trade partners, right? We're talking the EU. We're talking Mexico, Canada, even though a trade deal is actually in place already with these countries. We're talking China. We're talking Japan. And some of the big trade partners, they will likely not see a huge retaliatory tariff impact already this week unless negotiations break down completely. And that's basically not what I see.

15:41And I've communicated this many weeks in a row. I consider the trade war old hat. And that's why it kind of annoys me that we need to spend so much time on it against this week. because the market is obviously very focused on the rate of change, obviously. And as long as we don't go back to April 2nd, which I find almost impossible, then we should put this behind us in many ways. I think the tariffs are here to stay. That's also important to note. We'll get back to why in our theme of the week. But we spent too much time on this trade war, in my opinion. and will hopefully get a confirmation on that this week.

16:25That would at least be my base case right now. Also, Scott Besson, he was on CNBC just a few hours ago, and he is trying to communicate a very upbeat message. That's at least how I read the tea leaves right now around this straightforward. Let's just move into that, Andreas, because we published an article last week about who's in Trump's good books. This seems to be very idiosyncratic on Trump's behalf. He's making the call in these individual countries based out of his gut feeling almost. I wanted to do a little quiz. We prepared a little beforehand here, Andreas. Which countries are the most likely to get trade deals?

17:02And just as it is on the poly market, it's sometimes very, very hard to make very specific what constitutes a trade deal, etc. Anyway, we mentioned a couple of countries. I can go first with the EU. I think that's one of the biggest ones, of course. I think the EU is moving in the right direction on how to handle Trump. I'm seeing some signs on that. Might go completely down the drain still. They've narrowed the issue down to some very, very tangible areas like cars, like bourbon, like very, very tangible stuff. And they're including the automotive industry, for example. They're bringing them in and saying, okay, we're going to have some tariffs.

17:42but maybe we can get them lowered if you promise to make some investments into the US. So they're trying to get sort of the same output that the Gulf states did during Trump's visit there. Get a number on the table, X billion dollars, X trillion dollars, whatever you can do. And I think that is the way, essentially, give Trump a number. And this is very hard for the EU to navigate, but I think they're moving in the right direction. We could get some sort of memorandum of understanding, one page or agreement some have talked about. The first one, I don't know if very many of you know this flag, even Andreas, you can introduce that.

18:18Yeah, I asked you to find Madagascar's flag. So I honestly don't know whether you found the right one. But the reason why Madagascar is interesting is that it kind of constituted one of the most bizarre cases back on Liberation Day. I can't recall the exact you know, terrorist rate that they were that they had to deal with at the time, but I think it was like plus 80%, something like that and we're talking about a country that mostly exports vanilla to the US almost exclusively, yeah peppercorn, right and

19:00and obviously they don't buy anything from the US they can't afford it They can afford it. So do we get a deal with a country like that? They've got a very, very specific product that the U.S. consumer needs, and they're not buying anything from the U.S. So will they get slapped big tariff in their face? I hope not, because that would be a very bad move. So let's see how they handle these mini countries. They obviously probably don't set a lot of time aside to negotiate with these guys, right? But that's why I brought it here, because it's an interesting micro case. Yeah. And it's very parallel to the infamous banana discussion in the Congress where Howard Lutting, I think, was asked, well, how about bananas?

19:46Oh, you can just produce them in the U.S., then there'll be no tariffs. Well, you can't really produce them in the U.S. You might be able to produce bananas somewhere, but I don't think you can produce vanilla within the contiguous United States. So that's a good example of that. Okay, Andreas, I put in Indonesia and Australia as well for two different reasons. Just very quickly here. Indonesia is very, very strategic for the US, just like Vietnam is. I think it's likely that they will have some paper done with them. It has geopolitical consequences. Australia could be an easy one to do, like the one with the UK.

20:16So that's why I put them there as sort of an easy bet here. You put in India and Mexico. What are your thoughts on them? Yeah, so India already offered zero tariffs in return. They had massive tariffs on, for example, food. so import tariffs from the US. So I actually think that they put an offer on the table that they could decide to go on and press accept with the US administration. So I think India is a decent safe choice to be invested in. I think China is a safe choice. I didn't include China here because we already have this memorandum of truth, whatever you call it. But China and India, two big Asian players, they have some level of understanding already with the US administration.

21:00I think that's important. We've been, you know, decently upbeat on Asia, continues to be so as a consequence of this. Mexico, I included it because it's, you know, it's been a toxic discussion this weekend with the, you know, turmoil in the streets in Mexico that we saw this weekend. But I actually get the impression that Scheinbaum, the Mexican president, and Trump, that they have a tremendous relationship or they've actually built the relationship over the past quarters. So I'm also a bit more upbeat on Mexico's behalf than Canada's, for example, even though we obviously have trade deals in place, at least until they're no longer in place between the countries here.

21:42So the point is, we actually have most of the relevant trade partners listed here. I'm actually most scared of behalf of Japan because it's such a big issue that Japan is one of the big exporters of cars to the US domestic market. And they're not really willing to do anything about it the other way around. So I mean, I haven't driven a car in Tokyo, but I think it would be very, very difficult to ride a Chevy over there. I think that's one of the reasons why. It's the same for senior. Yeah. So there are some practical obstacles, right? But the point here is that the export mix of Japan with the US is one that annoys Trump a lot.

22:29And in the article that we wrote for the Real Vision Pro subscribers, we obviously go through the data layer by layer to find those countries that are in Trump's good books and those that are not. So I think it's a very, very value-adding research paper for you to read ahead of this week. Let's just quickly touch upon a couple of topics before we get back to the main theme of the week and our tips on that. Big news out of the OPEC meeting this weekend. They're going to do a much larger production hike than anticipated. They're rolling back the production cuts faster than expected. They believe they have buyers for this.

23:09The Saudi Arabians actually kept their core prices relatively high. So we are seeing peak production levels almost. We're seeing it out of the US and also the OPEC countries approaching that. But obviously keeping oil prices relatively low, there is a matter of how much more can they produce. The OPEC country, Saudi Arabia has a lot of capacity, of course, still, but that is going to be an issue at some point. How much more can they do? And that is also, I believe, my take on this, you can respond in a minute, Andres, is that Saudi Arabia is still waging a price war, essentially, in oil. They have reversed on a complete U-turn on their strategy of keeping oil prices high.

23:49They're trying now to regain market share. because they have the lowest costs. It's as simple as that. And very specifically, I think they are perhaps targeting U.S. shale oil, which has much, much higher production costs. And I think we are at a pain threshold for U.S. shale oil. So interesting. I think obviously the short term this plays into Trump's playbook of keeping energy prices down. As we saw on the initial chart in Sweden, this is helping keeping Western inflation in check tremendously. but let's see. Obviously, the demand picture is going to decide this. Just a single note here. I had some questions on the restocking on the U.S.

24:33Strategic Petroleum Reserve. Yes, it's happening, but it's very, very slow. It's very, very tricky. And actually, the Senate pulled out the part of the big, beautiful bill that was allocating just north of a billion dollars to this. So this is not what's driving oil prices. the global demand picture is quite strong. And there seems to be bias for these. For that reason, Andres, I think we could see oil prices still go a little bit lower. You differ a bit on that. What's your take on oil here? So my take on commodity prices is that the tricky thing is to get the demand picture right. The easy thing is to get the supply picture right, typically.

25:16And we've put the Iran who's behind us. we know that OPEC is adding supply on a monthly basis. We're talking about a supply hike in August, by the way. So just to clarify that, they're discussing one in September as well. Typically, they only add oil when they're decently comfortable doing so. So I also think despite this obvious price wall ongoing, that they have grown increasingly comfortable with the economic outlook and the whole demand side of the question. So I think that we're higher when we're talking about ISIS October 1st, and I have a high confidence in this call. We traded oil both on the long and the short side around this whole bombing of Iran weekend.

26:03And now we're leaning along again. We're leaning along a lot of commodities on the back of this whole reopening of global trade, the reopening of global manufacturing and all of that. So I actually think that we're seeing uniformity in economic surprises around the globe in a positive sense. They're all pointing in the same direction. And I know that right now, and it's been a volatile day again, it's so easy to create a whole narrative that we have something to worry about again. But assuming no major hiccups from this week of tariff negotiations, I actually think that we're on track towards a recovery here.

26:43Yeah, and a further drop in the dollar would obviously aid that call as well. So let's see. We differ a little bit here, but we're still allowed to. It is very much politically driven, so let's see what happens. Any remarks, Andreas, on the non-farm payrolls from the end of last week? I just want to add that you should not be overly concerned with the job creation around 100K or 125K in the US because of the tectonic shifts that we're seeing. And we can get back to discussing what we're seeing beneath the hood in the labor market. But you don't need a high non-farm payrolls number to keep unemployment in check given what's ongoing with the border.

27:29police and all that. And we're actually seeing a decline in the labor force now. Many economists will warn against this, but I actually think it makes sense. And it's probably the part of the Trump policy mix that is mostly misunderstood by economists worldwide. It's by design that they want the labor force to shrink. It's by design that they want a weaker dollar. A lot of it is intentional, which is something I typically miss from the discussion that, fair enough, these are the consequences, but it's by design, it's by intention that they're seeking these outcomes. So by the end of the day, the labor market will obviously be impacted by the shutdown of the border.

28:19It will obviously be impacted by eyes returning illegal aliens to their home countries and all of that. And it's actually a major shift. So let's have a look at the theme of the week, which is the labor market. And we can go a bit into detail. Yeah, we can start out with this chart, which also featured in your, what was it this week, the steno sequence? I think you had it in as well. The year-and-year change in US tech employment. very, very drastic development over the past one to two years. Is this the AI effect what's happening here in Dresden? I don't think we can say that with a high degree of certainty yet, but my best guess is yes.