Is the Economy Running Too Hot? | Macro Mondays: August 10, 2026

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1:23Andreas Steno:right now on your screen macro mondays level up your week oh yeah hello out there welcome to

1:32Mikkel Rosenvold:real vision and welcome to macro mondays my name is milo small i'm your host for this show as usual and with me i have also as usual andreas steno welcome to the show andreas how are you doing

1:43Andreas Steno:good regal uh it's like 30 minutes we uh since we left each other at the office i'm still good

1:51Mikkel Rosenvold:That's great. People can probably look past that. Andres, I want to get straight into the frame. We have a lot of good stuff to talk about today. But everybody's eyes, obviously, on the inflation numbers coming out this Wednesday. So let's get straight into the frame, Andres. Year over year, the market expectation is at 3.4%, slightly down from last month. What's your expectations? Let's have a number here.

2:19Andreas Steno:Well, I can start by saying that the market has converged towards our nowcast. So I can see that the headline inflation is 0.1 on the month and the core inflation is 0.2. We have a couple of zeros in our nowcasting. So we're still below the market, but slightly less so than a week or two ago. So in a sense, I think the market has actually converged towards our view, which is a bit of a surprise to me. But yeah, as said, our now casting is incredibly soft again. And I think a lot of people underestimate the impact of the tariffs being paid back to corporate America, which is a big game changer to the reverse scenario that we had for most of this year and last year with tariffs being paid net-net.

3:08Andreas Steno:because obviously if you're a company receiving a lot of tariffs paid back now, there's no urgency to raise prices. And I think that's exactly what we're seeing in our data right now. So you were asking about the dollar to begin with. I think we'll have a soft dollar week upcoming, given our view on inflation.

3:29Mikkel Rosenvold:That didn't really answer my question for a number, Andreas.

3:32Andreas Steno:A couple of zeros. I said a couple of zeros.

3:34Mikkel Rosenvold:Okay. We'll dive much more into that. Also, your view on the timeline for the business cycle. You published a very interesting article on that and what's or who might be the executioner for the business cycle. We'll dive a little bit into that address and obviously also talk about the job numbers coming out last week. Before we get to that address, a little bit of fun here. You just sent me this tweet. I saw it yesterday as well. You get these a lot, these map tweets on X. Why isn't this a country? Why doesn't this country do that? Are they stupid? And this is essentially a suggestion that Germany, the Netherlands, and our country of Denmark, and half of Belgium, the Flanders region, should join together as a country.

4:22Mikkel Rosenvold:Would have twice the economy of the UK and France. I guess that's probably correct. The Dutch king would become president. Frankfurt would become the capital. and our prime minister, metaphorically, would become chancellor somehow. What do you say, Andreas? Note the omission of Berlin, the Brandenburg area, which is probably getting annexed by Poland or what? I don't know.

4:47Andreas Steno:Yeah, that was why I laughed when I saw this map because the way that they've just left out Berlin is absolutely amazing. I mean, for those of you who haven't been to Berlin, it's basically an economy made up by basket weavers and finger painters. So I get why you don't include it.

5:02Mikkel Rosenvold:That's rough, but yeah, I get it.

5:05Andreas Steno:So in that sense, everything business-related is ex-Berlin in Germany. I think that's reasonably fair to say. Sorry to the Berliners calling in here. We're having a bit of a laugh at your expense. But having said that, I actually think that it's always difficult with timelines, right? But I think it's an underestimated scenario that we will see some sort of formal alliances within the EU among, for example, this group of countries. I think it's reasonable to expect such a move over decades because, you know, especially since the UK left the European Union, this exact group of countries have, in some cases, searched for new alliances within the European Union.

5:50Andreas Steno:So I think that's why you see these, of course, satirical approaches to how to set up a new country. I don't think it will be a new country, but it could be some sort of informal alliance. and I wouldn't root that out.

6:02Mikkel Rosenvold:Actually, the most staggering, the most important part of this image and this proposed border is the one that you probably paid the least attention to and that's the border through the North Sea because you only have to move that maybe 500 miles to the west and then you get all Norway's oil. So that's probably the most important part of this map now, Dresd. We're absolutely not going to enter into a union with Germany. We've fought a lot of wars to stay out of that and we're absolutely not going to take back those areas of Sweden that's proposed here. So, no, a little bit of fun there, Andreas.

6:32Mikkel Rosenvold:Let's get back to the macro picture. Lots of stuff going on. Let's start with our now-casting, Andreas. Inflation, U.S. inflation still at floor levels. So, Andreas, as you mentioned earlier, we're not sitting in the same room. We were earlier today, so you're back at home now. So, I have to ask you, this room you're in right now, is the energy inflation there with you or where is it? It's nowhere to be seen.

6:58Andreas Steno:So you told me before we went out there that we should refrain from talking too much about Iran this week because it's getting almost annoying to talk about it on a weekly basis. Having said that, as I've alluded to for probably a month or so, I don't think we see any major tightness in oil markets. If you look at the dated oil prices, it's between France, roughly flat versus the front month future. So in that sense, if you have a physical market that is roughly on par with the future one month ahead, the physical market is not telling you to bring those barrels forward, if you know what I mean.

7:37Andreas Steno:They're not telling you to bring those barrels out of storage. And that's been my main message since we've approached this second memorandum of understanding that there's actually not a lot of risk premiums to price out of the energy market right now because there's no panic. so i you know it's anybody's guess when we get a new deal around the strait of humus it seems like the u.s is just willing to you know throw everything at that deal around the strait it's almost the thing to solve now uh who cares about nuclear weapons and all of that it's it's 10 years down the line anyway um and therefore when you look at at flows right now through the Strait of Hamos, especially if the source that Axios referred to on Friday in their story about the question is right.

8:31Andreas Steno:We're talking seven to eight million barrels a day, which is more than you get if you look at, for example, Kepler shipping data and so on and so forth. And I've said this throughout. Watch the curvature, watch the fiscal market, because there is a lot of unaccounted flows. And it remains the case if we trust the sources from within Pentagon. And I think we could just as well trust that because the physical market is telling the same story. So I'm saying a couple of things here. No, there is no energy panic right now. The physical market is doing okay. Of course, there's a slight scope for prices to mean lower over time.

9:10Andreas Steno:But China will likely be a constant floor under the market here. We have seen a pickup in refinance rates in China, meaning that they're importing more than they did during the peak panic. China was basically the country that balanced the market back then. And therefore, it won't be a straight line lower here. I think the most likely scenario for oil is that we chop around without major direction from here. So is the energy inflation in the room with us? I actually think energy prices will be a slight drag on inflation this month. So it is a benign impulse for inflation, but not major. The big benign impulse from energy in year-on-year terms will arrive late this year and obviously into Q1 next year, since we start to compare versus the peak of the Iran war back in March, April.

10:05Andreas Steno:So it's one of the main points I've made in this business cycle analysis. is everyone is so focused on central banks ending the cycle now because most central banks are moving in the direction of hikes. But what if this energy shock is just over? I think it is. In short, I think the energy shock is over. It's been over for a while. Will that lead central banks to abandon this hiking path into next year? In such case, we could prolong the business cycle for a long while, right?

10:38Mikkel Rosenvold:Yeah, because what data points to a hike right now, Andreas? Okay, the inflation or the growth parameter here looks relatively soft, but what data points to a hike here, really? I'm really struggling to understand that.

10:55Andreas Steno:Well, inflation from a couple of months ago did. Yeah. I think Williams of the New York FOMC He's probably not as important a voice as he was during the Powell reign because he was closely connected to Powell, right? But he basically said that he was against just looking in the view of your mirror on inflation, taking a decision now in September. So I think that was kind of the first important voice within the committee stating that maybe the updated projections for September will look a lot softer for inflation, which I think will be the case for most central banks. Because, you know, remember the assumptions made back in early June for most of the big central banks, they included oil prices around$115 or something like that in their central projection, right?

11:48Andreas Steno:And we're so far below that. So in most cases, we're even below the mild inflation scenario for most of these central banks just watching oil, right? So I think the updated staff projections when the big central banks meet in September will be key to understanding what's ahead for the central banks. And those staff projections will all else be equal, given where oil trades right now and given the prospects of a second memorandum of understanding, probably look a lot softer. so our data and I've been saying that for a month probably probably and I said let me underscore this probably tells the Fed that it should cut not hike I'm not saying that they will cut but they probably should given what we observe and therefore I struggle to see the case for an interest right hike from the Federal Reserve.

12:50Andreas Steno:And I think they will admit so in September as well. But it's still early days. And there's a lot of time between now and that meeting. So a quick break in your regular programming.

13:01Mikkel Rosenvold:If you're serious about your future, grab my free report called Prepare for 2030. I think you've got five years to make as much money as possible. And this guide will help you navigate what's coming. The link is in the description. Download it now. Yeah, still a few data points to navigate from. But we're getting close to that, obviously, going to be a big one on Wednesday. Let's turn our focus a little bit towards the growth parameter here, Andreas, and obviously also talking into the piece, the article on the business cycle that you wrote here. If you look at our nowcast parameter here, the growth parameter has rolled over quite significantly over the summer.

13:39Mikkel Rosenvold:Are you worried about this? Should there have been a stronger World Cup effect for the U.S. growth? or what are we looking at here?

13:48Andreas Steno:I'd actually argue that this is the exact World Cup hangover effect, right? It was also what we saw in Friday's job report. We had a pretty nasty print in leisure and hospitality. And what a lot of people got wrong about the World Cup is that you don't see the World Cup impact in the exact month of the World Cup. You see pre-World Cup in many ways. first of all due to technicalities around methodology right if you book a ticket in march for you know and a domestic ticket a flight ticket between a couple of the cities hosting the world cup it will turn up as a sale in march to a large extent and it will also turn up as inflation in March if you pressure off prices.

14:41And the reason why that impacts the

14:45Andreas Steno:business cycle in a way that it's probably done here is that a lot of the activity and a lot of the payments are obviously front-running the actual event, right? It's not like you decide, oh, there's a World Cup, and then you decide 24 hours ahead of the game, right? It's something your plan. So I think a lot of the impact was already seen during March and April and May. And if you look at the rate of change now, now casting back on page five, Michael, it probably peaked somewhere late May, right? And, you know, remember this is the rate of change where we always measured the rate of change versus the month prior, right?

15:25So, I mean, if we drop

15:26Andreas Steno:below 50, it just means that we're kind of leveling off a little versus a pretty solid economy during the second quarter. So I'm yet to be worried. And I think this is natural. You know, it is the hangover effect, the hangover impact of the World Cup. Having said that, if you look at some of the more sort of longer leads and, you know, I'm not going to unpack all of it here because, you know, you can read the full article in the ProTier at Real Vision and that now cast like you, right? But if you look at central banks and the reaction function from central banks and how that typically impacts the business cycle, I think there is a scope for more medium term stating that the business cycle could peak in rate of change terms in the fourth quarter of this year.

16:23Andreas Steno:But I'm not ready to say that the business cycle is over. It would require a lot more hikes from a lot of the big central banks before we get there. But it could sort of take the steam out of the economy a little bit into the fourth quarter. And again, I'm talking about the peak from a rate of change perspective. It doesn't necessarily mean that we go from peak to recession, right? A lot of people misunderstand that. But for markets, it's typically a relevant turning point. You kind of turn the page when you go from momentum up to momentum down, right? And in some cases, some would argue that we already saw that through July.

17:01Andreas Steno:I think it's a little bit more technical in nature what we saw in July. And my best guess is that we have another euphoric market coming up before New Year's. But we'll have to see. What I'm mostly proud of, if you dial back to our nowcasts, Miguel, is that we've probably, and I say probably because I don't have data on every single forecast on Earth, We've probably been the best inflation forecaster on earth with our now-casting technique this year. We've also been a very good forecaster of PMIs. And a lot of people then say, okay, what's sort of the timeline from your now-cast to forecasting the actual events to predicting market outcomes afterwards?

17:49Andreas Steno:And it's something that we'll have to fine-tune on a running basis. And I admittedly, to some extent, fell asleep at the wheel in July when I saw this drawdown in the data. But it's becoming clearer to us that we have an incredible lead on the market with this data. We're talking six, seven weeks between we observe something and until we actually see that impacting the actual economic key figures coming out from the Bureau of Labor Statistics, et cetera. So the whole task that we set out to solve here that we wanted to sort of be ahead of the official readings is we've solved that. Now we need to figure out exactly how to use that for trading.

18:30Andreas Steno:But we're getting there. And it's tasked with different layers, if you know what I mean. But we've been calling inflation six, seven weeks in advance, growth six, seven weeks in advance, very solidly since launching this. And therefore, I'm very comfortable with the data that we're showing here.

18:50Mikkel Rosenvold:Also, because you have a four to six week lag until it shows up in official numbers, and then you sometimes have a four to six week lag until it shows up in decision making sometimes, because sometimes you need one or two, three prints to be sure of that direction. So that is obviously something to watch, Andreas. Absolutely. So I just wanted to flag one of our most requested charts that we do on a regular basis in here. the Korea one so what are you seeing out of Korea? I know you update this almost every day Andreas, it's the first thing you do it's released weekly, right? The South Korean expert numbers

19:30Andreas Steno:every 10 days, right? 10 days, yeah