Macro Mondays: Brace Yourselves, Liquidity Is Coming - Top Trades for 2025 ft. Andreas Steno Larsen & Mikkel Rosenvold

0:28Have you ever wanted to trade bitcoin but haven't dared try? and much more. Explore equity indices, energy, metals, Forex, and beyond. With a simple and intuitive platform, you could trade anytime, anywhere. Experience the fast, accessible futures trading you've been waiting for with Plus500. With over 20 years of experience, Plus500 is your gateway to the markets. Visit us.plus500.com to learn more. Trading in futures involves the risk of loss and is not suitable for everyone. Not all applicants will qualify. Plus500. It's trading with a plus. Hi, everyone. I'm Raoul Pal, the CEO and co-founder of Real Vision.

1:02Here at Real Vision, we're committed to give you the best knowledge, tools, and network to help you succeed in your financial future. If you're enjoying this podcast, please take a moment to give it a five-star rating. It truly helps us continue to bring top-tier content. Thank you so much.

1:28Happy New Year, everyone, and welcome back to Macro Mondays. My name is Mikkel Rosenwald, your usual host, and with me, as usual as well, Andreas. Welcome to you, Andreas Deno. Thank you very much. What a first couple of trading days of the year. You know, I'm almost paralyzed. That's what's happened today. But frankly, we've made money, but, you know, it's been back and forth, back and forth, and Bitcoin just broke 100K before we went into the studio here. So a lot of stuff to talk about. Yeah. So Andres, yeah, we'll get back to Trump. We'll get back to a couple of good trades for 2025. That's sort of the theme today to get really, really actionable.

2:07Have you had a good holiday season, New Year, Andres? No, no, no, no. Why not? You know, I've been ill as beep. I struggled with, is it called a pneumonia or something like that? Pneumonia, yeah. Yeah. Over New Year's. it was my 35th birthday but I spent the entire day in bed together with my son so you know but I'm standing again up and running making money that's what counted Reyes great program for you today guys remember let's just for any new listeners perhaps into the new year that this is a sneak peek into the research that we do at Standard Research of which we publish a good chunk at Real Vision on the Pro Macro tier you can also tune in to our Pro Macro talks with Roel Powell.

2:54We're really looking forward to that. I think that's coming up. At the Pro Macro Chair, you can also tune into your State of the Union speak coming up. Yes. I think it's on Wednesday, right? Yes. Yeah. What can we expect from that? Well, loads of asymmetrical trade ideas. Some single names that I find really interesting for the year ahead. And also some thoughts of what could go wrong. because, you know, it seems like we've been stuck in a very positive environment for some quarters in a row. And yeah, let's see whether there are things to worry about as well. You know, a lot of people want us to cover both sides of the coin.

3:36So I'll look into both the positives and the negatives for this year. Okay, Andreas. Well, Andreas, I was preparing this show to talk about the Washington Post article that came out earlier today. leaks from inside the Trump camp that his terrorist plan was materializing, but was also being focused not as universal tariffs. They still call them universal tariffs, but it would only apply to certain key sectors. Quite important news. Quite significant market reactions as well. And then came on the bottom of my picture here, this post on Truth Social half an hour ago or so. Fake news. Donald Trump completely rejecting this new story.

4:20What was the market reaction like? What to make of all this? Well, if we start with bond yields and the US dollar, obviously the dollar sold off on the first headline from Wall Street Journal. And then we've kind of reversed most of that, or at least some of it after Trump calling it fake news. So here's how I read it. And let's see how you read it, Mikkel. so my assumption throughout has been that Donald Trump intends on using tariffs as a bargaining chip in negotiations in principle he's a lot more pro-free trade than what he's willing to admit in public so it annoys him a lot that some of his key staff members start talking to journalists about this being less hawkish than what it looks on the surface because he intends for it to look extremely hawkish due to the upcoming negotiations with Xi in China, due to the upcoming negotiations with the new PM in Canada.

5:31I assume that Justin Trudeau will step down this week. The whole purpose of this extremely hawkish surface is for it to look hawkish. So it's obviously bad if his staff members start talking about this not being as hawkish a terrorist plan behind closed doors. So I think that's why he's so annoyed. The bluff has been called. That's my takeaway here. So I actually think that we should listen more to the Wall Street Journal article than to Donald Trump's Truth Social post. But who knows? Have you ever wanted to trade Bitcoin but haven't dared try? With Plus 500 Futures, you can trade crypto without the hassle of opening a wallet.

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6:53With over 20 years of experience, Plus500 is your gateway to the markets. Visit us.plus500.com to learn more. Trading in futures involves the risk of loss and is not suitable for everyone. Not all applicants will qualify. Plus500. It's trading with a plus. Yeah, I agree completely. It's also possible another angle could be that the Washington Post article was sort of a trial run of this policy. How would markets react? How's the political reaction going to be? And then he had a very immediate market effect, which perhaps prompted him to issue this post. So really interesting stuff. A lot to keep track on when you're investing live, as you are, Andreas, to say the least.

7:38I'm very curious. We also heard today, a little longer down the news queue, that Trump is preparing to make a big bang of legislation. Taxes, border, tariffs, everything put into one piece of legislation, one huge act that he's getting Mike Johnson to push. He's essentially saying, this is what I want to do. You guys go make the legislation and put it on my desk for signing. will probably take some time, but very, very interesting. And another part of the Trump power grab, as I see it, because he essentially wants to say to him, okay, this is the legislation you need to pass. Other than that, go home.

8:21Stay on your porch. This is all we need to get done. And then you shouldn't do anything else, essentially. But also do notice that Michael Saylor of MicroStrategy visited Mar-a-Lago 48 hours ago or so. And I think he mostly spent his time with Eric Trump, Donald's son, talking Bitcoin, a potential Bitcoin reserve. And, you know, the timing is a bit peculiar. After this, Michael Saylor basically went public trying to raise a couple of billion in perpetuals. So, you know, maybe he's sniffed out something in relation to this Bitcoin reserve. Will it be announced already a few days after Trump taking office?

9:04My bet would be yes. I don't know, but at least it's, you know, it's a clear signal that Michael Saylor is running around at Mahalako all the time, right? So a lot of stuff is happening. And they've actually prepared a whole list of things this time around. First time around when Donald Trump entered office, he had nothing prepared. No. Nothing at all. This time it's all prepared. Completely prepared. So everything will happen within the first couple of weeks. Yeah. If he can't get it done. If he can't get it done, and then he will plan, basically play golf for the rest of his term, I think. And he'll ask Congress to do the same.

9:38He'll have to utilize this Republican majority. Let's just stick with Bitcoin a little bit. Back over 100K today. Is this potential government purchase, mass purchase of Bitcoin, is that what we need to permanently put us above 100K? 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.

10:16And the great thing is that in addition to crypto, Plus500 gives you access to a wide range of instruments. S &P 500, NASDAQ, gas, and much more. Explore equity indices, energy, metals, Forex, and beyond. With a simple and intuitive platform, you can trade anytime, anywhere. Experience the fast, accessible futures trading you've been waiting for with Plus500. With over 20 years of experience, Plus500 is your gateway to the markets. Visit us.plus500.com to learn more. Trading in futures involves the risk of loss and is not suitable for everyone. Not all applicants will qualify. Plus500, it's trading with a plus.

10:53Or is that already priced in? What do you think? I know this is speculating, but... Okay, is it priced in? No. So if you look at various prediction markets, it's still roughly at a 50-50 probability, maybe even slightly below 50 in probability markets. So no, I don't think it's priced in. Obviously, it's been a theme for a while, but it's not fully priced in. I consider it a massive buy the rumor, sell the fact kind of event. You know, I don't necessarily think that it's a blessing for Bitcoin to be as involved with Washington DC as it could get here. While it could be a blessing for some of the old coins that we've discussed in recent months, if they're not involved in the reserve.

11:41So let's see. You know, there are pros and cons being actively involved in DC politics. and Bitcoin will be as soon as they have the strategic reserve, obviously. But aren't they already? I mean, most institutional investors are getting into Bitcoin. The other Senate is getting into Bitcoin and into crypto. I think with regards to whether this is already priced in, it's hard to price in. I mean, this is not only news. This would be a huge demand. Yeah, it's a flow, basically. So it's, I mean, of course it can be priced in, but it's still a surge of demand if this happens. So let's see what materializes.

12:21We'll get back to that. 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. Andres, before we get to the five good trades for 2025, I want to reach back to another article you put out on liquidity. I really like this.

13:00Obviously, I'm an old management consultant, so I love charts like this or slides like this. This is the lifecycle of liquidity. Maybe just explain this to me like I'm 12. What's going on here? Not like I'm 12, but explain this to me like I'm a management consultant. Oh, okay. That was a different question. So the whole purpose of discussing the liquidity cycle is to discuss when to expect a new round of QE or a new round of liquidity to arrive. Because, you know, we've been discussing that for, say, the better half of 2024 without anything really happening on that front. so when should we actually expect QE to arrive at least bond investors they would like that to happen pretty soon me included sorry for being wrong on that and my overwhelming take is that we're in the very final phase of admitting to QE being necessary again and this life cycle is lifecycle that we've seen over and over and over in US monetary policy.

14:16So let's start from the beginning, QE. The last round of QE was during the pandemic. They allowed QE to run for way too long because when you do QE, you're like, okay, let's just do this until it's not really necessary anymore. We're not in any rush to get out of this. So let's just do it. And then they taper QE as they see fit, as they see markets behave a lot more solidly. But they taper QE to avoid like an immediate impact on markets, right? They want it to be a smooth process all the way until the point where they no longer buy bonds and add liquidity. once they get to the net zero phase where they do not add liquidity anymore they ultimately announce qt they try to withdraw some of this liquidity we've been in that process for a while but during 2022 it start started hurting markets a lot so towards the end of 2022 as the market impact got too big, they de facto announced what I call QB, quantitative balancing.

15:29So if they withdraw$1 via QT, they add$1 via another program. For example, the overnight reverse repo facility or the Treasury General account, they ensure that liquidity levels remain in balance. And that's kind of the environment we've been in since late 22. And it's pretty positive because you basically have a flaw under the liquidity level. Now, around quarter turns and year turns, we have some very nasty liquidity developments because of liquidity being close to what I consider paying thresholds for markets. And around quarter turns and year turns, we have this window dressing ongoing by banks.

16:11So the Federal Reserve is aware of that and they try to mitigate the issues via all sorts of technical adjustments to their policies. That's essentially the phase we're at now. They know that we're at pain thresholds. They know they have to safeguard these levels. So they added a standing repo facility over New Year's. It wasn't used a whole lot, but they still, they were aware that they needed to add some liquidity. They did a cut technical adjustment to the overnight reverse repo facility back in December to push some more liquidity into the system. So they know that they're towards the very end of this phase.

16:46And once they feel like they no longer have the ammunition to keep this QB regime intact without doing all sorts of technical adjustments all the time, they'll start adding liquidity again. It's the next step. There is nothing between the current status and the next phase of QE. So we just, I mean, we need some sort of meltdown in bond markets or a few nasty job reports, etc. Then we'll get there. So we are pretty close to some sort of liquidity addition scenario. And I'm pretty certain that it will happen this year. And how will that materialize? What headlines to look out for or remarks from that?

17:24I think we'll see either some nasty numbers on non-farm payrolls or some very adverse developments in bond markets before they get to this conclusion. But we're not too far off. And it basically leads to the conclusion that the very strong dollar that we've seen lately is about to reverse. And I personally think the dollar peaked just before this article with sources from the Trump administration saying that maybe we will not be as aggressive on tariffs as you thought. Yeah. And should that be the case, I think this is a tremendous chart. It's made by one from our team, Mikkel, right? It shows that we had the exact same discussion in 2016, 2017, just after the Trump administration took office.

18:17And a lot of talks about tariffs. And then 2017 ended up being a year where not a lot of tariffs were implemented. We had a lot of turmoil in the administration. Wouldn't rule that out completely this year either. And the dollar actually ended up weakening on a trend basis all year. I think that's a likely scenario this year as well. What do you think is the coming Trump administration's goal for the dollar here? Are they okay with a drop or? Yeah, why not? Why not? I mean, so at least if you look at Trump's communication around the dollar historically, he's not been, you know, he's, of course, he's an America first kind of guy, right?

19:03meaning that you can obviously state that it's important as a symbol to have a strong dollar. But on the other hand, it's very hard to get a balance of trade flows with China without having a weaker dollar, right? So ultimately, from a trade perspective, I think the weaker dollar is actually what they're after. yeah so and it's kind of the same message you you get from scott besant the new um treasury secretary right you know he's in favor of a a strong dollar from a reserves perspective but if you want foreigners to add to dollar reserves you need to make the dollar sufficiently weak for them to be able to buy it and i think that's the most important takeaway way, if they actually want to ensure that the dollar is used in FX reserves across the globe, it needs to be strong, but sufficiently weak for them to be able to buy it.

20:03And right now, you're not able to buy a lot of dollars in China because it's too strong. Okay, Andreas. Yes. Five good trades for 2025. I spent far too long introducing the show, so you have two minutes per trade. Now, we have all the time we need, but let's run through them. I know this might be a slightly longer scope than we usually do on this show, but it's a good timing. Yeah, it's more like a 25 discussion, right? Yeah, absolutely. But it covers some trends. So let's go over them in headline terms. Yeah, but let me just start by saying, I think what's happening right now is a testimony to us reaching new all-time highs here in January.

20:40I think that we've seen a lot of fear in markets. It's been accepted by everyone that we would revisit 70K in Bitcoin because of this global liquidity chart, which is basically only driven by the dollar. Liquidity is not dwindling. It's just a dollar exchange rate exercise, which I dislike. So, you know, I'm still pretty upbeat. And why is that? Well, okay, we don't need a lot of soft news to get some more interest rate cuts priced in now. We probably have roughly one and a half cuts priced in for the entire year for now. And, you know, with the signals we're getting from our labor market models, they might get a decent excuse to cut interest rates from the labor market.

21:28You know, it's not like I'm saying the economy will do poorly, but they have a base case of 4.3 % unemployment now. it's very easy for them to get a surprise on the downside from an employment perspective. And they could use that as the political cover to cut interest rates, even though things are going okay. You will certainly not get a high five if you do not cut interest rates from the White House this year. So they want you to cut interest rates and they need some political cover to do that. So I think betting on a few more cuts is a pretty decent idea. Then, and this is probably the Widowmaker suggestion, right?

22:12Let's assume that this tariff show is not as bad as feared, right? Boy, we have some cheap stuff in Europe to offer you, guys. For example, French bonds, they've traded like shit for a while. they've traded better today because of the initial tariff story and you know the European Central Bank will have to buy European sovereign debt again this year I'm pretty certain about that so I think that's that's a strong case as well if you're into like more classic instruments as as European fixed income and that's the relevant trade both these we're talking about relevant trades as of now basically yeah more or less yeah Again, it's been trading like shit for a while, but I think the first signs are there of a recovery.

23:09And then we obviously need to consider, Michael, that China is doing really, really bad. When you look at our now costs right now, China is absolutely on the floor, maybe even through the floor from a consumption perspective. and I've been investigating whether there are smart ways to implement this without taking too much risk of being wrong-footed by some new stimulus program or whatever in China. And I actually think buying copper and selling iron ore is a very strong case as a spread trade. So look at it this way, right? China will not build bridges to nowhere again. They know that the infrastructure strategy that they pursued for almost a couple of decades is a thing of the past now.

24:05And their demographics do not underpin the strategy where they keep building stuff that they don't have any use for. So they'll focus their efforts on stuff that they can use and stuff that will help them replace their lack of labor. so data centers solar parks stuff like that right so they need copper still to some extent but they do not need iron ore on a high level trend basis here and I think this trade works even if China doesn't really recover this year it will also work if it does recover but it can also quote unquote lift with the fact that China is really not doing well then we have the question of geopolitics this year and obviously those prospects are exceptionally tied to both what's ongoing in the Middle East but also to oil markets overall and yet I'm not really sure whether I considered my base case that we get some sort of new Riata cord but pitch it, Mikkel.

25:25I mean, we are seeing movements in that direction. I think overall, as I've mentioned here, in my view, geopolitical risk is on the decline. And that can always turn around in a second, but that is my base case. I think we are moving to a point where the Gaza war is either fizzling out or moving to some sort of agreement. It doesn't have to be a black and white. You go from war and now it's peace. It doesn't have to be like that because it's all fizzle out. And then you look at the Middle East. What have you got? You've got an Israel who's lost all the support, a lot of its popular support in the West, still has its major government support, but that is declining.

26:05You have a very, very beleaguered Iran doing very little offensively around the Middle East, doing all they can to keep their own country together. And then you have Saudi Arabia with a massive need of investments and of hard cash due to the oil price. So that should lay the groundwork for renewed talks on normalization. Normalization meaning the relationships between Israel and Arab countries. And the idea of the Riyadh Accord is obviously some sort of grand agreement where Saudi Arabia and Iran and Israel, they don't become allies, but they become part of the same security infrastructure. It could involve that Saudi Arabia takes some responsibility with regards to Gaza, with regards to Yemen, perhaps the Houthis, to get that problem solved.

26:56There is some potential here, and it could also include Iran, because Iran has signal that they're very, very open to talking about a nuclear deal. So if the willingness is there within the U.S. administration, there is some potential to do a grand bargain for the Middle East, a potential I haven't seen for decades, essentially. So it's going to be really, really tricky, but I think we will see some movements in that direction. And will that include a softer dollar and more oil? Yeah, very possibly. Very possibly. I mean, Saudi Arabia wants to regain the market shares that it's, I wouldn't even say lost, that it threw away in an attempt to keep the oil price up.

27:35They still have a very strong competitive advantage. It's obviously much cheaper to pull the oil there than anywhere else in the world. So I think at some point, especially as we get closer to the midterm elections in the US, it will get very, very attractive for Donald Trump to manage the price of the pumps. So we'll have to see if some sort of agreement is possible down there. Obviously, the big caveat of this or the big possibility for Trump here is to create a security infrastructure that allows the US to pivot away from the Middle East. And that's going to be really, really tempting for Trump if you can pull that off.

28:12Yeah, so in all transparency, Miguel, we are along a few proxy oil positions right now. So this is maybe not a story for January, right? But I kind of agree with you that this is one to watch this year, especially since a lot of OPEC members, they've been running out of patience in many ways with the Saudi Arabian strategy. and now that we have some momentum behind the oil price for the first time in a little while, we've basically broken this wedge pattern to the upside and we traded that as soon as we saw that breakout. I don't think we have tens of dollars left in this oil trade because it will be too tempting for the OPEC members to get in there and flood the market with some oil if the price goes up, right?

29:02speaking of oil cars and and the likes Mikkel and I'll allow you to pitch this this one as well because you know in my opinion Elon basically bought a government yeah he's won every single internal battle within that administration so far also the stuff on visas and is it called hb1s or whatever it's called um he won that internal battle versus the maca uh the classic maca uh people of the republicans but is he taking it too far now i mean he's he's asking uh the king in the uk to to dissolve parliament he's tweeting that they need to uh imprison kiosdama yeah you know it's is he taking it too far and is there a risk that he will be kicked out.

30:01I mean, to some extent, all this activity on X mirrors the activity of Donald Trump back in 2017 when he got into office. I mean, Donald Trump has basically just delegated that to Elon Musk, it seems, to be the bulldog on social media. I think he is really, really pissing off a lot of people, a lot of international actors. But again, he's not the president. He's not a member of the administration directly. So Donald Trump can always get in and smooth things out. So the big question is, how much is this endorsed by Donald Trump? How much is the PC being asked to do this? We simply don't know. Obviously, there is a limit to how far he can go here.

30:41There might be a point where Donald Trump has to cut off Elon, but that's not going to be an easy thing to do. He's not a guy you want to piss off. He's possibly the one guy you don't want to piss off in the world right now. So, I mean, it's going to be really, really interesting. I think Tesla is one of the most interesting investment cases this year. There is absolutely a case to show Tesla if he goes too far and gets cut out of the government system. On the other hand, there is still some upside potential when and if Donald Trump starts talking about electrical vehicles. I mean, we haven't even heard anything from that angle of Elon buying a government.