"The Printer Is Coming" | Macro Mondays: November 10th, 2025

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2:13Hello out there. Welcome to Real Vision. Welcome to Macro Mondays. It's been another very, very interesting week and weekend in global macro. And we're here to unpack it all for you. My name is Mikkel Woosenvall. I'm your usual host here at Macro Mondays and contributor at Real Vision. And with me as usual, co-host Andreas. Welcome to the show, Andreas. Thanks. And, you know, for those of you watching the show live here, I'm not sitting in a cellar. I'm actually just straight on the other side of the desktop here from Mikkel. But it looks like we're worlds apart, at least in terms of lighting.

2:48Yeah, we're absolutely not techies in that regard. We are trying to even it out. But anyway, it makes it look like we have multiple office spaces to our company, Andreas. That's the angle I'm going to go with here. Okay, Andreas, very, very interesting times. We are perhaps looking at a reopening of the U.S. government. We're looking at some very, very interesting metrics on liquidity that we'll go through later. And in general, very, very interesting times. Maybe back to stimulus checks from the U.S. government. Let's get back to that a little bit, Andreas. Yes. Remember, guys, this is our weekly free show where we take a narrow dive into all our macro research.

3:28For the deep dive, you need to go to Real Vision Pro. In there, you'll have access to our editorials, weekly pieces, and also our weekly portfolio updates every Friday, where we update our model portfolio and give you a view into the thematics that we're currently buying into ourselves. So you need to go to Real Vision Pro for that. But before we get to the macro stuff, Andreas, I want to spend a little bit of time on a retirement this week. A true Wall Street investing giant, a tycoon of the business, Andreas. Can you guess who it is? Here you go. Let's have a picture up here. Nancy Pelosi, one of the best investors, outperformed almost every hedge fund in 2024.

4:11New York Post reported that since she was elected to Congress, I believe it was in 87, she's netted a 14.5 average annual return, which is very, very, very good. So this is obviously mostly driven by her husband. She has to get a lot of the credit, but very, very important stuff, Andres. Are you following the Pelosi ETF or any of her investments? Well, you said initially that she was going to retire. We don't know whether she will open a hedge fund from here, but at least it would be interesting to see whether she can mirror those returns outside of Capitol Hill. I'm not sure.

4:53Having said that, Miguel, I actually thought that you were about to mention Barron Trump because he's done very well this year as well, but he's obviously not a tycoon or whatever you called it on Capitol Hill. So maybe Nancy simply got it off last week. It was a terrible week, right? Maybe that was it. She was tired of watching it. Okay, Andreas, we're going to be talking a lot about liquidity this week, trying unpacking what's going on right now, what the effects of the U.S. government shutdown has been. We haven't talked too much about the shutdown in recent weeks. Perhaps that was a little bit of a mistake on our side.

5:28So we'll try and dive into how that has played into markets. I just want to play a little video here. I think it's from the CEO of the New York Fed about where the hopes, at least, for liquidity right now. Let's see if we can get it on the screen here. Your ATM is safe. Your banks are safe. There's enough cash in the financial system. And there is an infinite amount of cash at the Federal Reserve. An infinite amount of cash at the Federal Reserve. An infinite amount of cash at the Federal Reserve.

6:07There we go, Andreas. Unlimited liquidity about to be unleashed. Is it that easy? Explain the liquidity picture and why it's important right now, Andreas. Let's just get the facts straight first. We're talking about Neil Kaskari. He's an alternate member of the committee from Neapolis. And it's an old clip, but very relevant in the context of what Williams from the New York Fed said on Friday. So John Williams, one of the 2025 committee members from New York, he's obviously in charge of the desk as it's labeled, the desk that conducts these repo operations to control liquidity in the dollar money market.

6:51So it is worth listening to when he talks about the balance sheet. Let me put it like that. And he said on Friday that the Fed is about to expand its balance sheet. Let me put it like that, due to emerging stress signals from the dollar money market, especially the dollar repo market. And this is something that we've flagged for two or three weeks running, that we're talking about a liquidity situation that is no longer temporary in nature. It is permanent in nature. We simply have too few dollars oiling the money market in the US. And that is an issue that they'll have to solve structurally, not temporarily, in my opinion.

7:39So I think it's safe to say that they're going to expand their balance sheet. The question is just about the timing now. And Andreas, you posted this chart about the SOFR Fed Fund spread. And I'm reaching the limit of my understanding here. You'll have to explain this to me. Why is this spread important? And what does it mean that it's gone into the stress level here lately? Okay. First of all, Miguel, I spent most of my weekend getting increasingly angry at the flood of tourist takes that we've seen on SOFR interest rates from banks to Finfluences to whatever. I don't necessarily know whether a lot of people have actually traded SOFR or repos because it certainly doesn't look like it when you read their comments on it.

8:30So in short, a sofa rate is a repo rate. It basically means that it's a secured rate. So it is an interest rate that is collateralized, if you know what I mean. It is basically a secured transaction where you overnight get cash in return for posting collateral. It could be a treasury in this case. It's basically the most pristine collateral you have. and then you obviously pay a little fee, a little rate to borrow that cash against that collateral overnight. It's called a repo transaction because the transaction reverses the day after. So why is the repo market important, first of all? Well, the repo market is basically the market that allows the system to be levered.

9:18So for example, if you're running a hedge fund, as I've done, And you can use the repo market to gain leverage in your portfolio by posting this collateral in return for cash so you can buy more. But that's effectively what a lot of levered funds do. They do borrow in these repo transactions to ensure that they can lever up their notional, for example, in basis trades or in asset swap credit trades, etc. I know I'm talking about a lot of details here, but the point is you use this collateralized secured lending market to lever up your notional when you're a levered investor. So when SOFR spikes, it is a result of not enough dollars being available for these players.

10:10It could also, of course, be banks, but mostly these levered players. and there's a very direct link between

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11:22The ability of levered funds to lever up their notion and the ability for markets to keep rallying because these players, they do absorb a lot of duration risk in markets. They do absorb a lot of the equity risk, counterpart risk via these levered bets. So ultimately, when sulfur rates spike, you tend to see ripple effects across the entire landscape of assets. And I made a little sketch where I actually asked AI to make a little sketch of which part of the risk asset curve to expect to take a hit when sulfur spikes and vice versa. and when it retreats, as it's actually done over the past, say, three or four days.

12:12So basically, the more levered an asset class, the more impacted it is from the sulfur stress spike. So crypto is obviously first in line, but also very options-heavy individual stocks because optionality is leverage by the end of the day. And therefore, you've seen everything from old coins to stocks that have been traded incredibly actively via options taking a beating while this SOFR stress was ongoing. The good news is the SOFR stress is now fading. Most important reason being that we've seen the US government adding liquidity since the middle of last week. and if the government reopens, I'll allow you to touch on that in a second, we'll see an increased liquidity flow from the U.S.

13:09Treasury into money markets again because they're no longer keeping tax dollars trapped at the Federal Reserve, which they've done for the past 40 days since they haven't been allowed to pay their bills, basically. So, Mikkel, do we get at the government reopening? I guess that's the key question here. It looks like it, right? It absolutely looks like it. We spend all day here in Europe wondering about this while the Americans have been asleep. So I think in our evening time and coming out, we will get more firm news on this. It definitely looks that way and maybe a little bit earlier than I thought.

13:43I had predicted it for later this week. But it sure seems like it. I think the election day last week in several states and cities was important for the Democrats to get past. Now it's a matter of doing a deal with the devil. I mean, getting the government back up, getting people their food stamps, etc. So it is a complicated issue because for the Democrats that are voting for this, it opens the risk of them being primaried, as you talk about, of the left wing of the Democratic Party getting in and primarying them out. So we'll see. I think they will be finding enough Democrats to voting this through and getting the government reopened.

14:29So 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. The question is, Andreas, how much does this solve? because we've talked about that, Rose posted about that, huge floods of money into the market. Does that solve the silver stress and where does it leave the market when the government reopens? You know, the interesting thing about the silver interest rate is that it spikes versus, for example, the Fed funds rate or the interest on reserve balances when there is exactly not enough liquidity.

15:17so you can have a very very calm development and then all of a sudden the marginal pricing of a dollar in these repo transactions becomes very very sensitive to one dollar leaving the system and that's what i've been saying over and over and over the federal reserve will try and you know allow the tightening process of their balance sheet to unfold itself until that exact point where it becomes crystal clear that they've reached this pain threshold. And we now have the evidence of that. So I'm as certain as I can be that they will respond to this. Now that the government most likely reopens, we'll probably see an inflow of at the max 150 billion from now until New Year's, but probably enough for the reserve to wait until the December meeting to take a decision on how to expand the balance sheet, but they will expand the balance sheet.

16:17John Williams is the voice to listen to. He's the head of the desk, so the desk that conducts these repo transactions to ensure that money market rates stay within the corridor that they intend them to stay within. So he's basically the guy in charge. And many of the members of the committee, they have no fucking clue around how repo markets work. So when Williams say they will expand the balance sheet, they will expand the balance sheet. I can promise you that. The question is just the timing now. The question is the magnitude of that balance sheet expansion, but it's coming. The printer is coming.

16:52That's exactly what I wanted this clip to other traders. Well, that's that sort of feeling. I'll just pull in this chart as well, Andreas. The Bitcoin performance could as well as been the NASDAQ. It looks almost the same after what you call the sofa flip going above 0.2. Why is this so marked after these flips? So I think you need to look at it this way. When you have stress in sofa rates, it basically means that levered funds, such as hedge funds, they've either received the message from their counterpart banks that they cannot get the same repo line as they've had before. So they simply don't have the same availability of cash in these repo transactions, meaning that they'll have to scale down the leverage.

17:42That's one way of looking at it. And the other way of looking at it is that the accessibility of cash in the system is worse because of a U.S. Treasury that has sucked in capital due to the government shutdown and the TGA buildup and due to the Federal Reserve slowly but surely removing these dollars via their QT program. So in either case, this has to be seen as a symptom of a system that is in scarcity of cash for these repo transactions. And repo transactions, they serve as the oil that flows through the system and ensures that the dollar money market works as intended, especially for these levered funds.

18:35So all in all, when you have SOFR stress, you'll see less risk-taking by levered funds. So they'll simply have to dial down their exposure. And in the case where you see SOFR retracing lower versus, for example, the Fed funds rate, it is a symptom of less scarcity. And let me stress less scarcity. we still have a scarce situation in the dollar money market because otherwise SOFR would print below the effective Fed Funds rate. The effective Fed Funds rate is an unsecured rate between banks while SOFR is a secured rate between a bank and a fund typically. So when you have a secured rate, you typically see that below the unsecured rate.

19:26And we currently don't see that. We see it above. So there's still scarcity, but less scarcity than a week ago. And that should alleviate the stress along the risk curve. And I think that is exactly why you are here right now. I cannot stress this and underscore this enough. I think this is a very, very, very important joke. Yeah, very interesting. This is obviously what all this led into and why it was important to get this sort of technical explanation here, because this is extremely important if this turns out to be the case, especially time with a government reopening. So, yeah, and Michael, I've written a five, ten pager on this for clients, you know, explaining this in more detail and also, you know, providing the roadmap on how to invest based on the assumption that we're at this exact critical juncture.

20:20but in any case i think this is this is the most relevant theme in global macro right now and you simply need to listen to someone who's been trading repos who's been running elaborate funds to understand why these mechanics matter i've seen so many bad takes on this that i've stopped counting and as someone who's actually had my hands dirty in these repo markets i can assure you that many of the people writing about this, they have no clue whatsoever what it is. And this is a very, very niche market. I mean, and honestly, it's so technical that I even after having worked with it for years, I still struggle to understand it fully.

21:02And I fully admit to that. So people that haven't worked with repo transactions, they have no clue. I can guarantee you that. Okay, Andreas, let's move on to something, some economics that even I understand. Donald Trump is defending his tariffs set up despite things not looking very good in the Supreme Court. The hearings began last week on the emergency tariffs there. And it's looking like he might lose that case, leaving at least a big part of his tariffs set up invalid, illegal. And he'll have to go through some other path to get them reinstored and to keep that revenue flowing, essentially.

21:44My best guess is, Andreas, that he is looking to actually get them passed by Congress. That would be the tough but the long-term best way of doing it, obviously. And to do that, he needs political leverage. And he pulled out the big gun there, tariff dividends. Another very new concept for us to understand. But at least it's something I can understand instead of these sofa rays, Andreas. So essentially, Trump is bringing in a lot of revenue on tariffs, upwards of half a trillion dollars almost. And now he wants to hand that out to the Americans in the form of a$2 ,000 check. So we're essentially back to the direct-to-household helicopter money of the COVID days.

22:33I know Scott Besant has downplayed this a little bit, but that's massive, right, if this happens? yeah especially if you end up sending you know every single adult 2k you know with postal mail and then you know it was it was actually quite literally what happened during covid right uh even some of the americans living here in denmark they received it via postal mail right um so So is 2K per adult a lot? Oh, yeah, it is. So I'm not really sure whether this is a promise that you can fully rely on. I mean, we're talking 1.6, 1.7x, the biggest check received during COVID per adult. So it would be massive if he handed out 2K.

23:31at all. I made a simple chart on it. Labeled it Opronomics as back, right? You get a car, you get a car, you get a car and you get a terrorist dividend and you know whatnot. And compared to the COVID checks, we're talking including the base effect of personal income having grown since 2020. We're talking if they A out 2K to each adult, even even discounting for the fact that they've said not to the maybe 10 % highest earners, it would be the biggest single month for the personal income of U.S. households ever. Also inflation adjusted. And remember what happened when you handed out all of these checks back in 2021 and so forth.

24:22And it was just crazy times. So I think it will be... you know it sorry I'm laughing but you know it reminds me so much of 2020 2021 this initiative right so yeah and if it happens we'll have to watch the inflation curve and the following days obviously so this is probably not going to happen I mean this is political posturing but it's on the table now and it's obviously part of a it's the first steps in a potential congressional political war over tariffs, because if Trump can't get them done by emergency degrees, he will most likely at some point have to get them approved by Congress. And I mean, going back to April, that was a complete no-go, in my opinion, politically.

25:12People were way too scared of the effects. Now, you haven't really seen the tariflation. The revenue is good. It's tasty. if you can make it even more tasty for people by dangling dividends in front of their heads, this might just get through Congress. And he might just be able to do that before the midterms. It's very, very interesting, at least, what happens over the space. And Mikkel, speaking of inflation, right, we were supposed to receive the October inflation report this week. So, you know, typically it would have been released on the Wednesday during this week of the month. And even if the government reopens, say, later today or tomorrow, whatever, we're not going to get that data.

25:59Because, you know, they rely on a lot of agents compiling survey data in various regions and so on and so forth. And they absolutely haven't been to work. So I'm not sure that they have the data they need to release a report for October. I'm not sure we'll ever get one. I don't have the details right now. But in case we get one, they'll end up imputing a lot of the data. And then there's limited value in that. In any case, I think it's very interesting that we've been able to observe our set of price indicators through the month. and it seems to me that we are in an environment where inflation is actually falling year and year.

26:47We can get on the screen here our micro regime model. So these are our own measurements of the economy right now. Yeah. And the point here is you need to look at this as a probability score of inflation rising relative to where it is right now. We have inflation at 3%. from the last report that was updated. And the probability of that growing from 3 % to 3.1, 3.2, 3.3 is close to zero now, given how we observe price pressures in the US. So in other words, it's most likely the case that we're heading towards 2.8, 2.7, and so on and so forth for the rest of the year, which is exactly what was needed to greenlight another cut in December from the Federal Reserve.

27:32So quite a few of the members have said, well, it's tricky for us to take decisions when we don't have any data availability. I think that's a bullshit argument to a large extent since we have so many great tools to monitor stuff in real time outside of the Bureau of Labor Statistics. But of course, I know that this is also a matter of relying on the data, if you know what I mean. Yeah, that's it. Yeah. Yeah. Yeah. But it's extremely interesting. This brings me to one of the list of questions I wanted to bring on here, Andreas. I need to find this from ZeroFox. So how should we interpret the upcoming macro data, the data that we're going to get?

28:11Is it a bad news? Is it a good news scenario because this will drive us to a cut in December? Yes, I think this is a very clever question, actually, and I think it's spot on. So the issue for many of the high beta bits, such as Bitcoin, but also some of the stocks that we've been involved in, is that they rely on monetary policy moving in the direction of easier policy terms on a running basis to a large extent. And Powell all of a sudden questioned that because of the lack of data, but also because they had a lot of internal discussions on what to do when they were kind of blindfolded or driving the car, looking at the rearview mirror and so on and so forth, all of these analogies.

29:01So if we get a lot of bad news when this data comes out, it solidifies that Powell is still got the mandate to keep easing, which is basically what led us towards a very, very strong rally a month or two ago. And I think that's the important next step here. We'd actually like to see some pretty soft inflation data, bad data, if you know what I mean. It's obviously good data to some extent, but it would also be okay for the case if we received some pretty nasty growth data from October, because I think we will. October was not a good month because of the standoff between China and the US. We saw that in shipping volumes and so on and so forth.

29:45So the ultimate point here is that if you get a reopening of the trade volumes between China and the US, as we did back in May, June, and you square that with the Fed Reserve cutting interest rates into it and inflation not spiraling out of control, you have a tremendous cocktail. So a combination of bad news and good news, in a sense, but the economic data being the bad news before the good news arrives. absolutely Andreas that looks like a very very decent setup for the rest of the year which is also what we've been talking about so that's pretty much what we had this week just to sum it up an attempt at some explanations of what's been going on over the past few weeks no but I mean we do actually have some macro factors to explain some of it but also an explanation as to why things may improve in coming weeks any final ideas or remarks Andreas?