Most-Hated Rally Ever? | Macro Mondays: September 15, 2025

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1:55Hello out there. Welcome to another edition of Macro Mondays here at Real Vision. My name is Mikkel Rosenwald. I'm your host as usual, also this week. And as usual, I'm joined by my co-host Andreas. Welcome to the show, Andreas. Hey, Mikkel. So, Andreas, this is the big week, I guess. we're often caught up with releases of numbers or single events in the world of macro. But this week, a very, very big week with the Fed decision, we'll get much more into that later. But just tell us your gut feeling or sort of your hunch heading into this. How are you feeling? Sounding like a sports reporter here.

2:31Yeah, but I also thought you were talking about the Champions League season commencing here. But at least I look forward to that as well. But having said that, Fed meeting this week is a bit of a peculiar one, given that the market is already more or less on top of the 25 basis points that it's likely going to be delivered. But if you look at the expectations among economists, I'd actually argue that we have a pretty interesting outcome space upcoming for the meeting. First of all, I think we have seven or eight economists expecting no cut at all, including the Bloomberg economics team. And as far as I'm concerned, the Bloomberg economics team is one of the better predictors of the U.S.

3:22economy. So I'm very surprised to see them with that kind of forecast for Wednesday. And we only have two professional forecasters suggesting a 50 basis points cut as the base case. So, if you look at the distribution of outcomes, you have more people expecting no cut than people expecting a 50 basis points cut. I kind of opened the door myself for a 50 basis point cut last week when I saw that shocker in initial claims. It proved to be a nothing burger, and I've shown why in our macro research at Real Vision. But in any case, they have a pretty damn good excuse to cut now and to sound dovish.

4:04given that the labor market, at least on the surface, looks incredibly weak. As you and I have touched upon over and over, the labor market is probably in a better shape than what is at least visible at the surface. But officials have a pretty solid incentive to cut here, given what we've seen in the labor market over the past couple of months. so all in all I think this will turn into another incredible buying opportunity and I think most people and most pundits except more or less us expected September to be a bad month September has turned into a pretty solid month so far it's been quite good so far yeah you know Nasdaq is Nasdaq is up 0.6 % or so by the time of this show again today New all-time highs.

5:01We've seen new all-time highs in Japan. We've seen new all-time highs in China, etc. So things are moving forward in a pretty solid fashion from a return perspective against all odds. And let me just reiterate why. We've seen a professional community of investors be incredibly reluctant to buy into this rebound. It's probably the most hated rally that we've seen in years. I love that term, the most hated rally. And a lot of people are still stuck with that. Oh, it cannot be true that the Trump administration can sort of oversee these kind of returns. And that's especially a narrative that is present when you go outside of the US.

5:40I mean, here in Europe and also when I travel to Asia, a lot of people remain in that mode and say, okay, that kind of behavior towards trade partners, etc. We cannot understand why that leads to returns. but it doesn't really matter as long as the earnings cycle, the business cycle picks up amidst all of this turbulence and noise and that's exactly what's happening, right? Yeah, there's a kind of, I've mentioned this picture before, kind of a bumblebee feeling around the US economy. It isn't supposed to fly but no one has told it that so it's still flying. We're getting very, very close however to the Henrik C bear window, our great compatriot.

6:18It's very big on X with promising the greatest recession in a century. It should be coming up mid-October. So we're still looking forward to that address. We'll get much more into the Fed decision and the expectations for markets here because that is going to be pivotal for the rest of the year, what the Fed decides to do. Before we get to that, just a reminder that this is our weekly sneak peek into all the analysis that we published at Real Vision. We are part of a great community of Real Vision. We've joined it with full force after the summer, and we're very happy to be there. To get full access into Andreas' takes and trade ideas, you have to go to the Pro tier at Will Rissing, but there's greater value in the other tiers as well, so go check out that.

7:03Remember, however, that even though, Andreas, you've been right about September, that our trade ideas may, as we usually say, be... Summertime may be good, summertime may be shit.

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8:16Always good to have Gennaro Cartuso in there, Andres. So, Andres, let's touch on a couple of other topics before we get back into the Fed decision here. We often talk about where are we in the cycle? Are we at the top of the wave right now? And then you posted this front page of The Economist. We can get it on the screen here, which kind of worried me. This signals to me top of the wave stuff. Now the economists are in on the AI bed. This is probably the time when you hear a cab driver begin talking about AI stocks. Or what do you make of this, Andreas? Well, usually yes, right? At least we're not early cycle on a narrative or a topic when you see a front page of The Economist covering that topic.

9:06I think there's a caveat this time around to that very simple view. and that is the lack of positioning in the AI bet from the biggest professional investors out there. As part of our weekly editorial on Friday, I collected the data on the leveraged positioning across all of the major U.S. equity indices from mainly hedge fund clients, but also family offices with access to futures, right? Those capable of actually, yeah, levering up their nominal when they bet on U.S. equities and other asset classes. And net-net, we're actually still in a zone where those levered players are net short, mostly because they're net short Russell, which is small cap indices, but also to some extent because of a lack of positioning in AI.

10:08And I think that's incredibly striking. Of course, we have some of the momentum players chasing this rally higher now. Several of these names are present buying stocks day in and day out because of the momentum that we're seeing. But the discretionary funds, they're not super long. Probably as they can read the tea leaves in the sense and say, okay, this looks a bit exhausted in many ways, both when you look at multiples, when you look at you know, use value of it and so on and so forth, especially after The Economist has now jumped the bandwagon. But ultimately, okay, the three trillion bet on AI, I haven't read the article in The Economist.

10:58It's been more than a decade since I subscribed to that shitty paper. But sorry, pardon my French. But the point here is when you look at the CapEx cycle, the investment cycle in AI, we're still talking about a hockey stick cycle with a big hockey stick towards the end of Trump's presidency, right? If you ask Mark Zuckerberg, when will this CapEx show up in the size that you promised, his response, and he even said that out loud at this White House dinner, is that, well, we'll see that towards the end of your presidency, right? But he kept it within the window of the presidency, right? So I think the surprise here could be that we actually see that hockey stick moving forward in time.

11:43I mean, could we see a positive surprise in 26? I think that's likely. Could we see a negative surprise in 27, 28? I think that's likely as well, if you look at typical cycles. So, you know, for now, it's too early to call the top in surprises on this AI investment thesis. and what's even more interesting is that we have an obvious ongoing capex cycle in ai but we have no capex cycle to be seen anywhere else and my best guess is that the rest of the corporate space will have to catch up to the capex cycle seen in ai and not vice versa right now because we're likely going to see a forced capex cycle in everything from manufacturing to farming to, you know, all of the sectors really in need of automated solutions now that tariffs are in place.

12:39Yeah, yeah. So what you're suggesting here is that we're currently in a data center capex cycle where every last bit of free capital is being thrown at data centers. At some point, this will have to filter down through the economy to robotics, to accounting software, what have you. That's the point, right? Yes. And on top of that, and I know we'll get to it in a second when we'll discuss the, I don't know whether we should call it the impossible triangle, but when you look at the current state of affairs in the US, we have very, very lukewarm CapEx plans from manufacturers, farmers, and many of those working in the real-life economy, if you know what I mean.

13:28And I think it is driven by the uncertainty around the tariff levels. Are they on? Are they off? Will they be annulled by the Supreme Court and all of that? But once we really settle on a tariff regime, which I think is maximum a month away, it will be a major eye-opener to the corporate community that you simply have to invest. And we're not there yet. So it's a very asymmetrical outcome space to the upside for the CapEx cycle because the CapEx cycle is very, very underwater outside of data centers right now. Yeah, a lot of people have been holding back money for months, obviously. Perhaps underscoring that potential timeline is the reason you're using today that we're getting close to a TikTok deal.

14:12And I think TikTok is a footnote in that. I mean, it's a huge company, huge deal. Perhaps more of a symbol of the much improved US-China relations, despite this trade war ongoing, that you're actually getting solutions done on contentious topics like TikTok. And potentially, this is a trigger of a larger deal or larger understanding on tariffs as well. I know this underscores the point you've been making about a quite benign relationship between the Trump administration and China. How do you view this? Yeah, so, I mean, when you look at the secondary tariffs imposed on India, due to their large oil purchases from Russia, the first question you should ask yourself is, why haven't they imposed secondary tariffs on China?

15:05Because they're buying almost as many barrels of oil. Russia as India. But yet they haven't targeted China with these secondary tariffs. So at least something is ongoing, is going on there. And since the spring standoff between Xi and Trump, my main take has been that the U.S. kind of learned that it was impossible to just cut off the supply chain from China in one go. It will have to take years. And that's why they've decided on a slightly more conciliatory path with Beijing because they simply have to. So in essence, I think China kind of holds the cards against the U.S. in this discussion for now.

15:52But still, if you look at trade flows, Mikkel, right, one thing is that we've seen a kind of reopening versus China. We've also seen a more conciliatory path of the negotiations. but we're still talking about trade flows that are very subdued very very subdued compared to just a year ago so we've seen a lot of rerouting we've seen a lot of new chinese export markets and for example we've seen no chinese buying of u.s soybeans it's part of the reason why farmers are stuck in a mess in the u.s so sure i agree that at least on the surface they're talking to each other in a slightly more conciliatory tone but the trade patterns are not particularly strong right now.

16:35And therefore, my best guess is that we're still on a path towards trend fracturing of geopolitical ties between the US and China. But both parties have accepted that this needs to be managed. You cannot just pull the rock from under that relationship in a matter of minutes. Both parties have kind of agreed on that. Yeah. So absolutely, Andreas. We might not get around it today, but I'll be covering it in Mother Drula. later this week. Obviously, over the weekend, we had Trump, for the first time, linking tariffs on China to the Ukraine-Russia war, but only in wording. I'm not really confident that he's going to push ahead with the 50 to 100 % tariffs that he mentioned on China over the Ukraine war.

17:22It's probably the only way to get some real traction on the Ukraine war, but the China issue is so much bigger than that for him. So just an interesting footnote here. And Miguel, the question, is whether you should see it as a direct threat or an out from the promised sanctions on Russia, right? Because as far as I read that communication, also the stories that emerged from the G7 call between high-level ministers, right, or high-level secretaries, he told the rest of the West that, okay, I can impose this on China, but you need to impose it as well, and you need to impose it on India as well, right?

18:03So tariffs would need to be backed by all G7 members. And that's never going to happen. I mean, it would probably even need to include Japan adding tariffs on China now, which is a very, very big deal for them. It would have to include the EU adding import tariffs on China. Remember that the EU is much more reliant on China in many ways than the US. uh so i i i think it was a way for trump to you know tell the rest of the west uh this is probably what should be done but i know you're not going to do it so a quick break in your regular programming 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 and and also at the very core of it what was the promised that, oh, I'll increase the sanctions of Russia once the European countries stop buying oil and gas from Russia.

19:05And that's not going to happen. We're under no circumstances ready, Europe as a whole, to stop buying Russian oil and gas. That's the sad nature of it. So anyway, we'll dive much deeper into that on Wednesday, Andreas. Let's get back to the Fed meeting as our main theme of this show, Andreas. I always like to pull up poly markets. So it has a 90 % chance of a 25 basis point decrease, 9 % of higher than that, meaning less than 1 % chance of no cut. Basically, the likelihood of LeBron James becoming, or Mr. Beast becoming the Democratic presidential nominee. I'm still looking for those. Or Jesus returning before end of year.

19:53I think that's in that ballpark as well. So is this a given or could? I still can't lose the feeling that Jay Powell would love an opportunity to really rattle the cage here and do a no-cut. Is that completely off the table?

20:15In my opinion, it is. The speech at Jackson Hole was a forward guidance targeted towards this meeting. probably also the upcoming meetings in October and December. So what we have in the market pricing right now is less than three cuts priced until the end of the year, a little less, but the market is pretty honed in on sort of a new cutting cycle commencing. And what I do know from my many years of central bank watching is that they don't want to start a cutting cycle in order for it to be completely reversed in a meeting or two from now. So when they start cutting, they typically mean business, right?

20:58They'll put out some sort of trajectory saying, okay, we intend on cutting more next time we meet and so on and so forth. So unless he completely pulls the rock from under that trajectory, I think we're in safe zone here, if you know what I mean, in terms of the market interpretation of what's going on. but I'm you know it would be the first time in a long while where a crystal clear cut in the market pricing is not delivered and they are painfully aware of the consequences of doing so so of course if he wants to leave with that kind of legacy being the guy that pulled the rock from under the Trump presidency whatever sure I'm not sure central bankers work like that I don't know Yeah, that's the nuclear scenario.

21:48I still think what we see from him is that he tries to work very, very much middle of the road, working the data. And I mean, it's obvious, even though inflation is not exactly where they want it to be, it's under control. And when unemployment is rising, that's where they look. That is still the priority for the Fed, I think, to combat unemployment. So absolutely. By the end of the day, Mikkel, when unemployment is ticking up, even though it's not really a big uptick yet, that becomes a priority for Powell as well, even though he's probably politically incentivized not to do anything. Because his legacy would be haunted by creating some sort of job market recession.

22:35And I don't think he wants that kind of legacy. he'd much rather prefer his legacy is actually pretty okay now if he manages to get to the finish line in one piece next year which I think he's on path to do if he delivers sort of a middle of the road does exactly what the market is telling him to do not more, not less why not keep it at that so say that we get the 25 basis point cut everyone is expecting how do you think markets will react to this will we have sort of a relief that now it's done or will it be like, okay, that's what we expected, let's move on? It all depends on whether we can safely pencil in that they'll cut more next time they meet.

23:18Because the 25 basis points should be done and listed for Wednesday. So what I'll be looking for is, first of all, already when the press release is out, is there a clue that they'll take the next step next time they meet? and as long as that clue is intact I think the market will do just fine the only caveat would be if they start discussing okay it's not given that we cut every time we meet one way of forward guiding is that you know could it be every other time that would be bad because it's it's a matter of how many cuts are the time for this year and they get to the expected three cuts or whatever so So you brought along this chart, Andres, which surprised me.

24:06And you covered this one in the beginning that a lot of economists are putting no cut at a higher likelihood of 50 basis points. And they're both unlikely. But does this indicate to you that there's still some positive momentum coming out of a – if the Fed keeps up the expectations of three cuts, that we still have some positive momentum, some positioning still shifting after that? Yeah, that's kind of my base case now because, I mean, you have a couple of the pretty important voices such as Bloomberg Economics calling for a no-cut. Also, Royal Bank of Canada. It's not like it's small institutions, right?

24:46And they typically have a pretty decent voice out there, especially Bloomberg, since they've had a pretty decent accuracy in their forecasting for the past few years, especially on inflation and labor markets. So I think it's an interesting bill chart, this one, even though it's pretty centered around that 25 basis points cut. Because you see the skew to the right side, right? More professional forecasters see them moving nowhere than doing 50 basis points. So that's pretty telling in relation to the chart you showed on poly markets odds. It's not that given that 25 basis points is fully priced in.

25:23Interesting, Andres. We'll be covering this obviously during the week and in our shows on Real Vision, especially if we get a surprise there. But let's see if we can get that cut this time. I just want to run by a few other charts address that you showed up that are, yeah, a little bit off topic, but really, really interesting here. Do you want to start with the one on payments? Yeah, we can do that. I just wanted to highlight a tremendous chart. This is from Jamie Kooch, yeah? Yeah, from our colleague Jamie. So I think a lot of people remain stuck in this old narrative that, well, transactions are not really happening on-chain.

26:07But here you have transactions on-chain versus Visa, Mastercard, PayPal, right, as far as I understand the data. And probably very feasible that we actually have on-chain activity exceeding that of the big payment systems. already, say, in 2026. So beneath the surface, we're amidst the tectonic shift also in how the typical fiat system interlinks with crypto. And this was an eye-opening chart to me. So I just wanted to highlight it and please have a look at Jamie's work. Yeah, it's a massive shift. It's worth noting that many of these SCP payments are still Visa, MasterCard, Amex payments, but they're much more tokenizable.

27:02It's not already tokenized. So I'll give you a completely and truly incredible chart here, Andreas. Very, very interesting stuff on this level. We also have the dollar positioning. I just wanted to get around as well, Andreas, because we get this question a lot, especially perhaps in Denmark, we have a lot of businesses doing business in dollars that they're very interested in where the dollar is going to go. Important for our business as well, to be completely frank addressed. But this chart tells us about the positioning in dollars. What stood out for you here? So a couple of takeaways, and it's actually really worthwhile spending a few minutes on because I've heard it over and over and over and over and over and over for the past three or four months from all investment banks, from the sell-side shops that, okay, everyone's already negative on the dollar.

28:00Sure, but what you see here is that the positioning is mainly versus EMFX. So think of the Mexican PISO, several emerging Asian currencies, and so on and so forth, right? It's not like we have a major bet against the dollar versus the euro or versus the sterling or versus the Japanese yen or versus the Canadian dollar, et cetera. Likely, as we've seen idiosyncratic stories for each of these currencies lately, as you can also see, we've seen an uptick in the dollar position in the white line here versus yen, euro on aggregate. Japan is stuck in a political mess. We've had the French political mess unfolding over the past month.

28:45we obviously have the two quarters in a row with negative growth in Canada. We have Australia stuck in a mess where they try to sort of reconnect with the West while their bigger trade partners are right next to them, this whole fracturing geopolitical environment, right? So many of the big currencies in the G10 basket, so Euro, Australian dollar, Canadian dollar, Japanese yen, etc., they've had any socratic bad stories. so i actually think that the next leg is going to be much weaker on the dollar again versus these currencies not as much versus the uh versus the merchant market currencies and i think that's been kind of a missing link for the next um move higher in everything debasement related if you know what i mean so bitcoin ethereum um you name it uh we've kind and needed some momentum in the dollar trade versus the other G10 currencies.