What's In Store for August? | Macro Mondays: August 4, 2025

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1:44Hello out there. Welcome to another edition of Macro Monday. My name is Mikkel Oswald. I'm your usual host. And as usual, I'm joined by my partner in crime, Andreas. Welcome to the show, Andreas. Thank you, Mikkel. Partner in crime. That sounds like we've been heading up the Bureau of Labor Statistics or something like that. Oh, what a story. We'll get back to that, Andreas. Lots of stuff happening. I can't remember such an eventful summer in global macro for years, but things are really happening. I guess 24 was quite, at least in US politics, was quite eventful as well, but we have so much stuff to talk about.

2:20Nuclear submarines, labor statistics, stock market seasonality, lots of good stuff here. Lots of interesting takes, Andreas, for this week. So we'll get to that in just a second. We're nearing the end of the summer here in Copenhagen, Andreas. How are you feeling about that? I'm pretty much done with the summer. I'm ready to go back to like mid-teens, like 50 degrees Fahrenheit. How are you feeling, Andreas? 15 degrees Fahrenheit. Are you sure about that? 50, 50. Okay, 50. You know, we live north, and after having spent a couple of weeks down south in Europe, I also prefer the slow, but short descent towards autumn temperatures here.

3:02So we're still stuck with, you know, slightly above normal temperatures here. And we don't have any AC whatsoever. So if you see the sweat here, you know why. I mean, we're simply not equipped to deal with summer temperatures in our neck of the woods. And hopefully they're soon gone. One thing is good, Andreas. It was worse in our old sauna studio that we used for regular listeners. They'll know what we're talking about. Anyway, Andreas, great show we have today. Remember, listeners, this is our weekly sneak peek into the analysis that we published at Real Vision. You'll have to sign up to the Real Vision Pro tier for full access.

3:42Andreas, you published a mammoth of an article today, a report, I would rather say, of looking deep into all the data that we have around the US economy, whether it can be trusted. We'll take a little sneak peek at that, give you some brief conclusions there later today. But lots of great stuff. We're going to dive much more into both oil and the situation over US and Russia in the drill article later this week. Put some sneak peeks here and there. Remember, we try to be extremely actionable and concrete in this podcast, but as always, our trade recommendations and analysis might be... Sometimes it may be good, sometimes it may be shit.

4:45a little bit of a laughingstock. We had, obviously, some heated arguments between former President Medvedev and Donald Trump. We've had that before. Donald Trump then moved some quote-unquote nuclear subs to strategic positions around Russia. I would assume they are always there around Russia somehow, but he mentioned that he did, and that caused a lot of people to fear World War III. So I know you have a go-to sort of way of thinking about preparing for nuclear war, Andreas. Something like if you prepare for nuclear war, if you're right, then it doesn't matter. If you're wrong, then it's, I mean, if the nuclear war happens, it doesn't really matter if you're positioned for it.

5:26That's the cusp of it. In any case, Andreas, I think this is way, way overstated. What do you make of this? So at least my take is that if you prepare for a World War III scenario and still buy stuff that is listed on an exchange, I don't really know why you would do that because, I mean, it's left to secure the credibility and validity of those securities in case of a complete meltdown between two nuclear powers, right? I personally don't fear this at all. It could be my famous last words as an investor, right? But I'll allow you to put some words on Medvedev after this mickle. But to me, he seems like more of an internet phenomenon than serious politicians at this stage.

6:17And this nuclear war, World War III risk kind of arrived right on the back of a weak non-farm payrolls report, the layoff of the Commissioner of Labor statistics. So it was kind of a triple whammy on Friday. And then, as per usual, I use the crypto markets as my guiding star over the course of the weekend since we obviously have open trading there And during Sunday, we slowly but surely returned to a much more positive vibe. And here we are today with a super, super strong open in the U.S. market and recovery of risk assets in many ways. It could obviously get a little choppy if we get this tit-for-tat communication between Russia and the U.S.

6:56because, you know, we don't need to give you a history lesson around how markets respond to nuclear powers talking tough. but I would put a very, very, very, very low probability on this. Also lower than, you know, what seems to be the conclusion after Friday. But Miko, fill us in a little bit on Menevated. He's obviously, you know, he was almost like the acting president for a period, if you know what I mean, Russia, the in-between period between the Putin's. So what's going on with him is even relevant. Yeah, he was very, very relevant because even though his presidency, was sort of a, he was a placeholder.

7:37Putin awaited, he could only be elected for two terms, then had to be off one term and then could get back. He was ridiculed for that, but that's still quite a powerful position to be in, in a country such as Russia. Now, on the other hand, I mean, almost right after he stepped down as president, he was prime minister for a period, he'd got after there, as Putin solidified his grip on the power. And many of Medvedev's closest allies and his ministers and his associates, they've been jailed. So his faction within the Russian leadership has been purged to a large extent. He's still there, probably because he's a well-known face in the West, and he has survived by becoming an internet troll, essentially.

8:21That's what he is. He is amplifying the messages of Russia, probably serving as sort of a fear-monger. He's always talking about European leaders going to the Gulag or Russia waging nuclear war. We have a dead hand system in place, et cetera. So one quick rule, because we are going to be talking a bit more about Russia in coming weeks. We have the Trump's deadline running out. We do have a lot of pressure for Russia to join some sort of peace deal over Ukraine. One very, very, very quick rule here for people to follow. Don't listen to the guy on the left here. I want to bring up these photos, Dmitry Medvedev.

8:56Don't listen to him. He's an internet troll. He's just spewing out crazy messages to survive. Instead, listen to the guy on the right here, Dmitry Peskov. He's the spokesman of the Kremlin, of Putin, and he's the guy to listen to. He did a presser today, Andres, calming the words, still solidifying Russia's position, and he has been doing so over the past few weeks. He essentially just noted that Trump had put out a new deadline, said, okay, we've heard that, but have no further comments to that. And I think that very much lines out the Russian approach to this. So I'll take a much deeper dive into these potential peace negotiations.

9:35Also, of course, the risks for World War III. We have to cover that whenever it's there in our weekly The Drill article. But for now, take it easy. This is not the end of the world, literally. No, and what a tremendous mustache that guy has. I mean, it's a wonderful mustache. he looks like a cantoonish Russian leader almost. And yeah, a really, really fun guy, I think. Yeah, he looks a lot like, do you remember the character Richard Burke in Friends, right? Yeah, he looks a lot like him. Monica's first boyfriend in the Friends series, but never mind. Absolutely. I don't know when they're... He's a great guy.

10:14He's very, very fun, very, very charismatic. So look out, Dmitry Peskov, he's the guy to listen to. So anyway, Andreas, Just let's move on to another heated situation because Trump is at war with several parts of his administration, at least the parts of his administration he hasn't appointed himself, both Jay Powell and now also the Bureau of Labor Statistics. Dr. Erica McEntarfer is now picked to be fired. He was disappointed with the latest job numbers. He has a history with Erica here. He also accused her of tampering with job numbers leading up to the election last year. So let's just begin with this fire and we can get back into whether there's any substance into the criticisms of the job numbers.

11:02What does this look like for an investor? You know, you would typically see this kind of action in Latin America or that's at least the first impression. We obviously also got a sell-off in the US dollar in response to this, and I think that's fair. Having said that, what's going to be tricky here is how to judge numbers coming out of the Bureau of Labor Statistics going forward now. And I think markets will look towards alternative sources of information, such as for inflation, it could be Truflation or State Street or some of the nowcasting that we do. I'm not saying that we have the same size as Truflation, but we're also trying to run our own independent set of observations just to have a second opinion on the official stuff.

11:56And for those of you familiar with Chinese Facebook, it's an independent research provider. I'm not paid to say this. Making a living out of trying to come up with alternative data resources for every single official data print in China. And I mean, we could certainly get there in the US. We're on a path towards such a setup where you simply need a second opinion on everything. take the simple example a month from now we have an acting at the Bureau of Labor Statistics right now if the number is super hot would you trust that at least you would some sort of confirmation whether that trend is correct or not I have a load of ideas on how to do that and you know to be frank here I actually think Trump is on to something when it comes to numbers being understated I just don't subscribe to it being the con job And I think it would have been better if they took that discussion internally.

12:57That would have been my suggestion as an economist. But, you know, looking at Erika McIntyre for she looks like a Karen. I have to admit to that. So in that sense, I get why Trump is angry, but joking aside. It also seems like you pointed to this in your article that they have cut down, that they've been hit by the federal hiring freeze and perhaps even had to reduce the staff, that they have fewer data collectors in the field across the states. That's at least a political Achilles heel for Trump because they can say, OK, well, if the numbers are bad, that's because you made us fire everybody.

13:39But Mikko, for those of you unfamiliar with your background, you worked close to the Treasury Secretary here in Scandinavia before joining my shop and worked as part of the diplomacy and the bureaucracy for a long while. And, you know, the first thing.

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14:59That I kind of conclude when I read the press release from a couple of months ago where they basically tell us, okay, we're not able to collect data here, there, and these three, four regions, whatever it was, because of a lack of resources. I kind of read that as a message to the administration, do not push further on this cost-cutting agenda because we're not able to fulfill all of our mandates, given that. But it is crystal clear when you look at the data right now, they're not collecting the same amount of data points as they were two quarters ago. And that's obviously bad. It basically means that you need to impute a lot of subcategories in inflation and probably also in the non-farm payrolls, which is an issue for the data quality, right?

15:44And you don't know whether you're comparing apples to bananas, basically, when you change the model like that. So how do you read this situation? Is this a typical bureaucratic answer to a cost-cutting campaign? or what's going on. This is essentially, yeah, that part of it is essentially the bureaucratic system fighting back because the bureaucratic system, they don't like having their budgets cut. They don't, I mean, for a career bureaucrat, it's a mission of success, how big your agency is and how many people you have under your management. So for them, this is bad. This is not what you want.

16:23And it's very, very common to fight back and say, okay, we've had this budget cut. We've implemented it, but now you can't expect us to perform as well as we have been performing. That's probably a little unfair, but it's, I mean, the timing is bad for Trump that he has forced this bureau to hold back on hiring. And at the same time, criticizes the quality of their statistics. That's just, yeah, there's a logical breach there that's hard to communicate to people, even though it's probably fair that they had to cut down some of their expenses and their spending. So, yeah, I agree, Andreas. The second part of the message he delivered on Friday was obviously that Jerome Tulate Powell should also be put out to pasture, as far as I remember, right?

17:10Great, great, great wording. So, a lot of stuff happened on Friday within the Federal Reserve as well. So a member appointed to the committee by Joe Biden roughly a year ago, I'm tempted to say Ariana Grande, but that's not her name, Ariana Fugler. That wouldn't have made a big difference anyway. But she resigned. And I kind of get why people are looking for the exit door in that committee right now because it's a terrible, terrible working environment, right? But having said that, it leaves Trump an opportunity to put another lame duck in the committee ahead of the September meeting, meaning that we will likely have a third member voting against the on-hold stance if it comes to that conclusion.

18:06and now that we've seen this revisions of job data on friday i think there's a pretty decent case for those descending in favor of a rate cut to really push forward that agenda internally uh the question is then whether we will see people resigning ahead of that meeting uh will we see powell throwing in the towel i don't think that's ruled out no that is without a doubt the strategy of the white house now they want powell to leave himself so they don't have to lay him off and that would be a better look in many ways and I also think it would save the credibility of the institution to some extent if he leaves himself so I would be really on the watch for such news over the next couple of months here because I would assume that other members of the committee feel the same way as Ariana Krugler why not just leave and you know and remember and just if you have both your, if Biden if Trump ends up firing the head of the labor statistics, if General Powell resigns and criticizes Trump, that may be a bad look for international investors because, as you said, it looks like a third world country.

19:13For Trump, politically, this is draining the swamp. I mean, this is exactly what he was elected to do in many ways, or it can at least be spun in that direction. So I don't think this is necessarily a problem politically for Trump. I don't think very many people in the country hold great love for Jay Powell outside of the investor circle. So, yeah, I think the political risks here are much smaller for Donald Trump. He could absolutely be spun into a great message. So, Andres, I just want to get to a few more hot takes this week. We have Eric Trump. We talked about Eric Trump last week. Messaged about when to buy the dips.

19:51Now he's there, buy the dips again. Is this the bellwether to go from to you? Do you think he knows something, or is he just trying to sort of position himself as the king of crypto here? Let me start by saying one thing. His timing looks better this time around. So when he initially said buy the dips, we had like two or three months of consecutive declines in Ethereum and we're actually rebounding pretty solidly today as far as I can see from the screens. More or less buy that original dip. So I can feel that from February. I feel that, absolutely. maybe need to give it another shot here but as I've said you know over and over over the past month or so the Genius Act is an act of genius it will create the legislative foundation for stable coins Ethereum will be a main part of that so I think there is a merit to his view and you know obviously Eric Trump is heavily invested in this theme himself so I personally prefer to listen to people actually investing in what they're trying to convey as a message.

21:01And he's certainly invested in this. So why not listen to Eric here? At least, you know, it goes hand in hand with our thinking right now. So for now, I listen to Eric, at least that. And once again, I know no one on this platform believes so, but for many investors, there's still that fringe case that somehow the value evaporates from Bitcoin and Ethereum. That's not going to happen now because we have a political safety net. And this is the political safety net, essentially. This doesn't mean that the government will intervene to keep Bitcoin over 100 ,000 or whatever, but that complete crash is simply not going to happen.

21:39It's too big to fail completely now. So at the very least, that tail risk has been handled here. You know, as a fund manager, Miguel, if you look at the return profile and you can basically take away the part that is very much to the left in the distribution, it adds some comfort to the case, right? So I think you're right that the left tail is smaller under this administration compared to, for example, Biden, since they're openly investing in it themselves. Absolutely. Just a quick word on tariffs, before we begin to sort of reassess or have a look at the outlook for August here. We know much more about tariffs now.

22:24Obviously, the European Union has come under heavy fire for the tariffs deal. I still believe it's looking quite okay, the 15 % we ended up with. Anything to note here, Andreas, to take along as an investor? Well, at least for the countries in question, the European Union got the best deal, right? Also compared to China, compared to what appears to be the deal for Switzerland, Mexico, Canada, etc. They accepted a humiliation to get to 15%. And as we know, you haven't really got any major deals in writing yet. I mean, you have sort of a framework. And we know that the European Union is very good at going from frameworks to long, long, long papers, right?

23:11So I think the European Union is in a decent spot right now and they'll obviously throw their bureaucracy at this Trump administration negotiating with, I don't know how many counterparts at the same time. So they can obviously not give the attention to detail that they want to, you know, in every single negotiation on earth. And it may give the EU some opportunities to actually sneak in some positives in that final deal. That would at least be my base case that the European Union is really trying to tweak the deal now that they've gotten the headline secured. Let's look at where we are right now.

23:43Just quickly, Andreas, if you go back to Trump's first term, this was about the point in his term where the relationship between the U.S., the cross-Atlantic relationship completely collapsed. Everyone was shouting at each other. No one was working in the same direction. Where are we now? I mean, we're half a year into Trump's presidency. Relationship is great. NATO is rock solid. No one is questioning that. You have this trade understanding. Trump is not wasting any more energy on that. He's cooperating on Ukraine. I mean, the cross-Atlantic relationship is as good as it's ever been under Trump.

24:15And that's a huge boon for the European Union, even though they had to swallow the humiliation issue, you see. So, yeah, still a very, very solid point on that. Andres, I want to look a little bit on the outlook, because obviously towards the end of last week, we had some numbers. You can take a deeper dive into your weekly article this Monday and whether to trust these numbers and how to gauge them. But still, I have the feeling on X and on Reddit elsewhere that people are beginning to fear that with these job numbers, with this outlook for growth in the economy, are we actually heading into a recession?

24:50That's not been our messaging, Andreas. Have we been too positive? How do you view the outlook for the next month and the rest of the year? Yeah, so first of all, let me just start by admitting to being wrong on ISM and non-farm payrolls on Friday. Both looked awful, in all honesty. And it went against my expectations. The pathetic answer would be to say, like Trump, yeah, it's because the numbers are wrong, right? but have we been wrong footed on stuff here? Yes, to some extent and I'll elaborate on a few details before we go to the discussion on whether this is an issue for the return profile of the month of August and into September.

25:36On the PMI first, Mikkel, I'll admit to CapEx, so capital expenditures of manufacturing companies still being completely in the bin. It goes against the wishes of Trump and especially Howard Lodnick but also against my expectations because I would have assumed that if you were a manufacturer in the US and you can see tariffs being implemented on your competitors, say in Europe, in China, that you would invest in expanding your own capacity basically to try and fill the void, try and gain market shares given that your competitors will be less competitive if they want to export stuff into the country.

26:18But we're not seeing that CapEx pickup. that's a part of the PMI survey in all regions in the US. And if you look at like the aggregate figure, it still looks like something from a recession, basically. The CapEx expectations are incredibly low for manufacturers. It's a different question if you look at Microsoft and Amazon and those hyperscalers in the cloud space, because they've, you know, I actually think we reached above 1 % of GDP in just data center spending from these big ones last week, at least in the communication in January. or the quarterly report, sorry. So, you know, there's just such a divergence between what's going on in classic manufacturing and what's going on in the AI economy on spending, basically.

27:02And, you know, I have to revisit my thesis if we do not see a pickup in CapEx expectations for the manufacturing sector soon, because that would wrong foot my view on the PMI and that would wrong foot my view on metals and, you know, the whole construction cycle and all that in the US. I would have assumed that we got a rebound because the local manufacturers were incentivized to try and invest now. But we're simply not seeing it in the PMIs yet. And that's basically what's wrong for me. Interesting. So let's just zoom in on the month of August because we've had this question as well on the seasonality.

27:38That's always charts that are brought up. I mean, this month is always good. This month is always bad. I just want to bring up this chart that you pulled from Bloomberg on the performance of NASDAQ in August, I think it is. So, obviously, very mixed picture. You get that for almost every month. What do you expect out of this August, just assuming in the next four weeks here? So, yeah, we've had some volatility in August. Last year, it was actually also in July, right? Each summer, three years in a row. So, that leads to the conclusion, okay, maybe there is something going on here, right? But I think it's a very, very lazy analysis to just point at seasonality without trying to figure out why.