How to Trade the Geopolitical Firehose: Ukraine, Turkey and Tariffs! | Macro Monday ft. Mikkel Rosenvold

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1:49Hello out there, welcome to another edition of Macro Mondays. I am Miguel Hustenwald and this is going to be a not so usual version of Macro Mondays. My usual co-host Andreas has fallen ill so I'm all alone with the reins today and this means that we will take a slightly different approach to this show. My area of expertise is obviously geopolitics as many of you probably know. So we're going to be taking a deep dive into the world of geopolitics right now. That's as hot as ever and has huge impacts on markets. Still, we're going to round off the show with a couple of trade ideas, also looking ahead at the upcoming tariffs deadline.

2:28So we're not all without a macro today, even though Andreas is not with us. As usual, we are sending this live on X, on Real Vision, on various platforms, YouTube, etc. We're also publishing this as a podcast. But if you're viewing this live, please do post your questions in the comments section for that, perhaps especially related to geopolitics. If you have questions specifically for Andreas or in areas that are a little bit outside of my area of expertise, please post them as well. And we will get back to those next week when Andreas is hopefully with us again, depending on the level of illness within the Copenhagen daycare system.

3:08Let's just put it like that.

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4:09So, as usual, this is a sneak peek into the research that we do at Sten Research. Today, specifically much of the research that goes into our The Drill article series. The Drill is a combination of our research on commodities and energy and geopolitics, hence the name. And it's a weekly article that you can get full access to via the pro macro subscription tier at Real Vision. Remember our usual disclaimer, obviously, and perhaps even more so today since I'm alone here, so no counterweights that our trade ideas and our analyses, they might be. Sometimes it may be good, sometimes it may be shit.

4:47Okay, let's get started, folks. And please pour on the questions. We'll get along those underway. We'll take a deep dive into the world of geopolitics, get all across the globe on various situations and how they might affect your portfolio. I want to start here. Let's show this picture of Usher Vance going to Greenland now. So Andreas and myself, we get a lot of questions every time something happens to Greenland, since it's obviously Danish territory. So let's just do a quick recap. This is not going to move the needle very much in your portfolios, guys. I know that. It's very, very hard to find any Greenland equities.

5:24And even if you did, I'm not sure I would suggest that. But just to cover it anyway. Hi, Raoul here. Listen, I think we've got until 2030 before the economic singularity arrives. Now, it might not be the exact date, but it's around then. So we have about six years to figure out how to unfuck our future. I've put together a report to help you called Prepare for 2030. It's going to help you take the first steps in that journey to make sure you're secure past 2030. So just click on the link below and start your journey now. Obviously, Donald Trump has kept on banging this drum on wanting to annex or at least include Greenland in some shape or form into the United States.

6:09Greenland is a part of Denmark and autonomous territory. And it seems now that the U.S. is trying to ramp up efforts by sending a bunch of officials as well as the wife of the vice president to Greenland. What's the status and what's likely to happen up there? Well, for many months, we, Andreas and I, both had the view that a deal was very much possible here. I mean, Greenland has been discussing independence for decades and have been raiding for the right time. Perhaps this was the right time. Now they had another suitor, another country ready to take over. However, what's happened over the past few months is that the Greenlandic politicians and the Greenlandic peoples have cooled remarkably on at least a quick independence.

6:58The Greenlandic government, it seems, suddenly realized that quick independence meant becoming a US territory. And that's definitely not what they meant by independence. The Greenlandic people have had this idea that they could become an independent state and could pick and choose from case to case between the world powers. and that's obviously not going to happen. Donald Trump very clearly has demonstrated that. So a few weeks ago, we had the elections in Greenland and that's a result that was, I think, displayed or discussed in a number of ways that that's not entirely accurate. So you have to understand that all Greenlandic politicians, more or less, want independence.

7:41That's nothing new. So to say that the independence wing has won this election is like saying that the anti-monarchy wing won the US elections. I mean, everyone almost in the Greenlandic parliament wants independence. The question is, how fast do they want it and how violent do they want it? Obviously, Greenland is very dependent on subsidies from Denmark. So when they say independence, does that mean an independence vote within the next six months? Does that mean independence even if Danish subsidies are cut, etc.? So the only party really truly pushing for accession into the United States, the Kolek party, received 300 votes.

8:20300 votes. So the atmosphere is definitely not one of simply applying to becoming the 51st state. Now, a lot of people have talked about the Nalarak party having a very, very good election, becoming the second largest party. They are the only people, they are the perhaps the harshest independence party. They want a referendum on independence very, very quickly. But it's not a Trump party. This is a left-wing party, as is most of Greenlandic politics. I mean, if Bernie Sanders were to pick a party in Greenland, these guys would probably be too left-wing for him in some cases. So to understand this, the Greenlandic people want independence.

9:07I think Trump has made it less likely that they will vote for independence within the next four years. And the ability of Trump to do a deal with Denmark has also fallen dramatically. Because Denmark never had the intention of keeping Greenland against its will. So if the Greenlandic people choose to vote for independence, Denmark will allow Greenland to be independent, and then the U.S. can swoop in. But now the Greenlandic people have seen whether that independence is equal to Trump. They don't really want it anymore. So for now, this is kind of a deadlock. Denmark can't really do anything. We can't really hand over Greenland without the Greenlandic people accepting to it, and they're definitely not too fond of that idea.

9:49So, okay, guys, enough about Greenland, unless you have more questions on the topic. I think it's going to be all show and very, very little action on this because there's not a whole lot you can actually do. Moving on from... Have you ever wanted to trade Bitcoin but haven't dared try? With Plus500 Futures, you can trade crypto without the hassle of opening a wallet. With just a few clicks, you can register and start practicing with their free and unlimited demo. See a trading opportunity? You'll be able to trade it in just two clicks. Feel ready? You can move to real money with as little as$100 once your account is approved.

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11:03From Greenland, we are having some interesting questions on tariffs. We'll get back to those later in the show. I want to move along to Ukraine. Obviously, the biggest geopolitical situation in 2025 and a situation to watch for all investors. this. Obviously, we had a long process up until this. We had the Riyadh talks. They were a huge shock to the European nations. You had the American delegation sitting right across the Russian delegation. This is a picture of subsequent talks between the US and Ukrainian administrations, but still the same room, looking very nice, by the way. And I think you should see these peace negotiations as sort of an M &A process here.

11:51Donald Trump, the first step in an M &A process is obviously that you evaluate the company that you're trying to purchase or merger with. They've done that. Trump has come to the conclusion, okay, we want to do a deal here. The first step then is not to go to the counterparty. That's to go to your own board. And that's what Trump did after the initial READ talks. The initial READ talks were a sort of a feeler. Is there any ground here? Do we want to do a deal? Okay, we want to do a deal. Now I have to talk to my owners and my shareholders. And that's what Trump did when he received Emmanuel Macron and Kirsten Stamer.

12:28That's what he did. That part of my French shit show of a press conference in the White House. That was meeting the shareholders. So the U.S. shareholders being the European countries and Ukraine, he had to get them on board. So he said, okay, now I have a mandate, more or less anyway, to go and actually deal with the counterparty being Russia. So that's where we're at right now. Trump has gotten some sort of a mandate from Europe and Ukraine, at least enough for him to initiate direct negotiations with Russia. Now we are entering a phase of negotiations where we should expect two things. First and foremost, we should expect volatility in this process.

13:08This is the way Trump usually deals with this kind of thing. When he doesn't get the other party to do what he wants, He pushes tariffs. He pushes sanctions. He withdraws support, etc. He very obviously did this with Ukraine. I mean, one day he pulled all military assistance and intelligence support, only to reinstate it maybe a week later when the Ukrainians had caved in and essentially given him the mandate he wanted. That's the most likely going to happen to Russia as well. So Trump has already indicated that he will be ramping up sanctions. He will be providing more weapons to the Ukrainians.

13:42I know that's a flip-flop. But you have to understand that these are two different parts of the negotiation process. So Trump is going to ramp up the pressure on Putin right up until the point where they have an agreement. That's the one thing you should expect. The other thing you should expect is for Trump to try and sort of tiptoe towards an agreement. What does this mean? Well, number one, it means that Trump will try to make smaller agreements on ceasefires or don't use these weapons or exchange these prisoners, etc., etc., etc., right up to the point where we're talking an actual broad ceasefire.

14:19We saw this. The initial ceasefire was that you couldn't attack each other's nuclear plants and other infrastructure installments. That's not really a ceasefire. They're still shooting at each other. The armies are still throwing everything at each other. The next step now is a Black Sea ceasefire. So that's sort of the next tiptoe here. And we might see more deals in that regard. It might be easing of some sanctions if and when Russia abides to this ceasefire. It's still my base case that we're looking at a ceasefire within one to two months here. An overall ceasefire as the next step towards an actual peace.

14:56How will this reflect on markets? So obviously, this is going to be very, very good news for markets. I mean, Europe is not going to be trading directly with Russia again on day one, but it will come relatively quickly. It's also a major de-risking of international affairs and potentially also sort of wrestling Russia out of China's grip. So in many cases, this should be a positive for equities, perhaps especially Europe and in particular Eastern European equities. We've discussed this in another podcast. There seems to be a lot of great cases for the Eastern Europeans to do really, really well in this scenario.

15:35Before I get to some more points on weapons, stocks, and trade ideas, just a question here. Hi, Mikkel. How do you interpret the theory cited by Peter Syhan that the U.S. administration has been infiltrated by Russian intelligence, which would partly or wholly explain the recent pivot in U.S. policy affecting Russian interests? well it's very likely that the US administration is to some extent infiltrated by Russian intelligence and it's very evident that the current US administration being Trump and a lot of his top advisors are more Russian friendly minded or at least not as critical of Russia however I also think this is the timing of this is of these talks and the peace process has something to do obviously with the fact that there's a new president, no matter who it is.

16:26This brings whole new momentum and new sort of vice to stuff. I think it's possible that Kamala would have initiated peace talks as well, perhaps not as rapid, not as violently as Trump is doing, but it is very much possible. The other factor is the simple fact that Ukraine is losing on the ground. So, I mean, no matter how you look at it, Ukraine is losing or have lost, depending on your temper. So right now is a good time for talks because it's not looking, it's not very likely that Ukraine will make headway on the front line for the next one to two years. Does this mean that Trump is pro-Russia?

17:05Well, evidently more so than Joe Biden. However, I also think these are the circumstances forming this. And I think we will see a very, very tough Trump over the coming weeks and months in these negotiations. He will have to give in to Putin on a number of issues. There's no question around that because Putin is winning on the battlefield. That doesn't mean that you're pro-Russia. That just means that you've lost a war with the US and Ukraine essentially have. So that's my take on that. I know this is a very heated and loaded subject. But anyway, please state your comments or questions in the section below.

17:45Okay, let's move on a little bit because I have a thesis here. One of the effects of the new Trump administration is that the European Union has awoken in its own terms. Europe is trying to rearm itself and it wants to do so by purchasing European built weapons. Okay, I think you've all got the memo on that. Most of you have also probably invested in it, or many of you may have. Rheinmetall, BAE Systems, etc. And I think a lot of the expected increases in military expenditure has already been priced into those equities. We still have a very big issue of these companies actually being able to deliver goods.

18:29I've mentioned the statistic before, but over the course of the Russo-Ukrainian war, North Korea has produced more than five times, or at least delivered more than five times the number of artillery shells than the entire European Union has. So when it comes to defense, the European Union has been outproduced by North Korea. And so obviously the European Union has all the financial, industrial know-how. We have everything we need to build way more artillery shells, but it takes a lot of time to ramp that up. It's a part of our industry in Europe that we have completely neglected for decades, first and foremost by cutting our defense expenditure, but also by purchasing a lot of US-built equipment for our defenses.

19:15So European politicians are obviously trying to buy European in this rearmament, but I think they're going to have to realize that they have to look beyond Europe to actually get stuff delivered because that's also where we're at. It's not enough anymore for European politicians to write out checks and say, okay, we're going to spend this amount of money in six years. No, we need actual guns and actual shells. The big European companies simply can't deliver that right now. Their order books are full. And that's why I still think there is a lot of momentum and a lot of potential in this for U.S.

19:48arms industries. Because even though Trump is doing everything he can to scare the Europeans away from the U.S. arms manufacturers, they're the only ones able to deliver at a large enough scale to satisfy the demand coming out of European defenses right now. So a couple of notes on this. I think there is a sub-trend or a very clear trend in military procurement that we're sick and tired of buying these very, very expensive fighter jets. Obviously, the F-35 is the most recent example. In many countries in Europe, there is now fear that if the U.S. leaves NATO, they have the leverage over our entire air force.

20:34say, for instance, Denmark, other countries have bought a lot of F-35 planes. If the U.S. refuses software updates for these planes, are they stuck on the ground? It's not entirely implausible. And that vulnerability comes both from reliance on the U.S., but also reliance on one weapon system that is extremely expensive. So meanwhile, you have people like Elon Musk and other tech gurus out there talking about that the fighter jet, the symbol of modern warfare, is becoming obsolete. And that's also what we're seeing on the ground in Russia and Ukraine. You're hearing very, very little about air attacks.

21:10It's all missiles and drones. Drones is where it's at. So over the coming one to two decades, and even within the next couple of years, given these huge increases in military spending that we're discussing, we're going to see a shift from fighter jets, from main battle tanks over into drones. And I'm not sure that has been quite priced in yet. Obviously, you have a bunch of European drone manufacturers. Not very many of them are publicly traded. So a good way to look is at autonomous technology and robotics ETFs. Could be a way of this. I don't think this purchasing spree in Europe has been priced into this sector yet at all.

21:51And I think it will get there because, as I just mentioned, we're not producing this stuff in Europe. So at least not to the extent that we want to buy it. two very specific examples a company called Air Environment just landed a huge deal with its US company just landed a huge deal with the Danish military to produce drones for use in Greenland ironically so we're having a US company deliver the drones that we need to patrol Greenland and the Arctic area these guys have a huge potential they already have inroads into most European defenses they have a huge potential to deliver larger drones. In the smaller drone game, which is also going to be very, very relevant, especially for army use, we have a company like Red Cat Holdings.

22:36They gained a lot after the election, as did many shares, but have also dropped since New Year's. I think there's huge potential here also within the US Army, because remember, Elon Musk has only just begun looking at Pentagon. Is it possible that he can begin to shift money away from these huge fighter jet, aircraft carrier, main battle tank, these very heavy, expensive investments and more into drones. We're talking billions of dollars worth of government purchases here that are ripe for the taking for these kind of companies. So a lot of potential in this sector. We'll discuss it with Raoul in our show on Thursday, I think.

23:14I think I'm very interested to hear his view on this. He's more into the technical analysis than I, so he might have some view on these charts. But a couple of interesting notes here, as I know a lot of you are looking into defense stocks. Okay, that was all I had about Ukraine and Europe. We can get a little more into that a little bit later. On the rim of Europe, I should probably say, lies Turkey. I'm not going to do a deep dive analysis of what's going on there. obviously Erdogan the leader of Turkey imprisoned and arrested Imamoglu, the mayor of Istanbul and one of his main rivals in Turkish politics he used to sneak a little maneuver because he managed to

24:05get Imamoglu's college degree revoked because you cheated. And that's, you would say, okay, obviously that's a bad look for a politician, but it's not the end of the world. It is in Turkey because you need for, to reach the highest offices in Turkey, you need a college degree. So that's actually a very, very sneaky way of getting a rival out of the picture. Obviously, markets didn't like this. Some have even called this a coup d 'etat, meaning that it's a power grab from Erdogan, essentially. and obviously send the lira spiraling down again. I know some people have had a lot of fun investing in Turkish equities over the past couple of years.

24:45It's not a game for me, I have to say. But very, very interesting developments. I'm very curious to see the role that Turkey is going to be playing in the peace negotiations. If it weren't for all these political shenanigans and all these disastrous effects they have on the Turkish currency and Turkish inflation, Turkey would be a very, very good investment candidate. But for me, this is simply too violent, too volatile for me. Moving a little bit south of that, another very, very contentious topic here, the Middle East. So I'm not going to go too deeply into the Israeli-Palestinian conflict, but we are going to touch a little bit upon it because it obviously affects commodities and energy a great deal.

25:30A couple of months ago, we had the Trump brokered ceasefire. It's always a debate. Was this something that the Biden administration put in place and Trump took it over the finish line? Who should get the credit for it? In any case, it's now broken down. So if Trump gets the credit for the ceasefire, he should also get the heat from the steel breaking down. Essentially, Israel asked for Trump's permission to initiate a new offensive into Gaza. They were dissatisfied with the pace of the hostage release of Hamas. And this means that this is not simply a blip. This is a full-scale breakdown of the ceasefire and a return to open hostilities, both in Gaza and potentially also in Lebanon.

26:14We're seeing that. This obviously had the ripple on effects that the Houthis in Yemen had all the excuse they need to start launching missiles at the sea, at international US shipping at the Middle East and even the Harrius Truman, the massive US nuclear carrier. So we were just at a point, just about ready to have global shipping flow back through the Red Sea. It was an insurer's question. We hear that from many of the great freight companies here in Copenhagen. And now that's all down the drain. So what does this mean for market? Well, I was hoping for the reopening of the Red Sea to relieve some of the inflation pressure in Europe even further.