¶ Intro / Opening
Bloomberg Audio Studios, Podcasts, radio News.
Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Wisenthal and.
I'm Tracy Alloway.
Tracy. Every day it feels like stocks and gold go up every day, stocks and gold, and stocks and gold, and it's just it's relentless.
I'll tell you what it's good for. Anyone invested in an index fund and a bunch of gold coins that their dad gave them.
Yeah, good for you.
Yeah, thank you.
The Tracy Alloway portfolio doing very well.
Yes, No, you're absolutely right. And the big thing about this is it's not really supposed to happen, right, Like You're not supposed to see stocks shoot up because of optimism about the future while gold simultaneously goes up because gold traditionally is the sort of dour yellow rock as you like to describe it, which usually signals something that is about to happen.
I'm going to relent. I'm going to relent to something.
Are you a gold bug?
Now?
No, Well, I'm going to relent on something. Okay, Right, I admit that gold is a medal. This is my big cave. I always no longer a rock. Yeah, this is my big cave. I used to say, there's yellow rocks. You know what, I'll acknowledge it's a medal.
If it's a medal, Now, will you admit that it has industrial applications?
Yeah, but they're very minor. And this is also I will not acknowledge that there is a a. It is mainly a store of value, or perceived to be. And when people are fearful, when people are mistrustful, and people don't TRUSTI had currencies or the governments, and there's all kinds of reasons to be skeptical about the governments that
¶ The Unlikely Rally: Stocks and Gold
issue paper currencies. I understand why people want to hold this metal that people have used as money for thousands of years.
I'm going to take you back to the jewelry district in New York and get you more excited about gold again.
No, and I'll just say on gold, I loved it. And then I wore that big chain when to the diamond district, and I wish I'd bought it, like now, that's like my bigorite. It was like thirty five thousand dollars gold necklace, and that today would probably be a forty five or fifty thousand dollars gold.
Neck Imagine how much that diamond encrusted furbie would be worth.
This is the thing they don't tell you about gold. By the way, if you spend ten thousand this is my crank take on gold. That's not crank. If you spend ten thousand dollars on a gold necklace, they give you a ten thousand dollars gold necklace. Yes, it's free. It's like you spend ten thousand dollars, they give you something for ten thousand dollars back. In a sense, it's a free transaction.
No, you get two things. You got something to wear and an investment.
Yeah you actually, Yeah. I wish I had had this realization when gold was like two hundred dollars an ounce. But anyway, it took me a while, and it'll.
Make a gold bug of you yet, I'm sure.
So these are really exciting wild times in the market, and the last time we talked to this guest was another wild time and an exciting time in the market. That was, of course April. We do, in fact have the perfect guests to try to understand everything that's happening all around the world in global macro. We're going to be speaking with the vice Chair of Global Macro at Deutsche Bank Ozon Tournament Ozon. Thank you so much for coming back on odd lots. Last time we talked to you,
we were in London. This time you're in New York, so thank you for coming to visit us.
Very good to be in New York. I'd love to be on this show, I mean, other to be invited again. UNGA good inners. This is the highlights. And by the way, I was going to bring my United Amamim Jersey Jurally looks like him and some Backlaba for Tracy, but couldn't find in the airport. Next time.
That's a good reason to do another future episode. Actually, we talked a lot about gold at the beginning, but I don't want to first ask about gold is in vidious swallowing the entire US or maybe even global economy.
Almost hand in hand, right, these two questions, I mean, they both continue to go higher and higher. Actually, let me start with gold, because you did you did put such an introy in it. One of the very famous memes on the internet, Caricultures, done maybe two three years ago. This gentleman or lady running a big macro h fund
¶ Ozan Tarman: Global Macro Perspective
looks around. I run very complicated products, but at the end, I buy gold, and these days that resonates even more, mentioned even more and more in these roundtables in TV studios like this. Normally that jin thinks, but it doesn't because at the moment it works in risk on and risk of. Last time you were around again, you called me at a very relevant time questioning US exceptionalism. I'm
sure we'll go into that. What's going on with US institutions, those question marks, all those question marks against the dollars help gold FX is about stories against the dollar. I'm sure we'll go into this as well. Some of the stories are now having a less easy time. Then people like to go into gold and we maybe going into a rate cut period cycle or not. Whether you're Miran or Hammock, that differs, but gold works in that as well. So for the moment, I always feel, you know, when
¶ Gold and NVIDIA: Drivers of Rally
it's the top three on TVs on my round tables, I put the orangsign on. But at the moment it works for a reason. Now, Nimdia, yeah, I mean if he had this show a year ago as well, you could have said all done as of this morning. One of my partners in success Sarrevelos. His piece is already viral. He's claiming, tongue in cheek that Nimdia is almost keeping us away from a recession. All that Chip story, all
that capex spending. If it wasn't for that, maybe we could either question or be in a recession.
I'm not sure he's saying it that tongue in cheek.
There agreed, and also others are joining him again. I'm hearing from my dear France clients this day morning Baine claims, and Lake's revenues quickly catch up with all this aikpex spend, we may be in big trouble. All of this bill bursts by twenty thirty, and we'll go into recession before that. Now we can say a lot can happen before twenty thirty, but warning signs are there. Last night's the big headlines the reason why again does that close on the ice
n media investing into open Ai. That also becomes almost circular. I mean this is not to Oracle invest in open ai, open a I invest in ni Media, Back and forth, back and forth. Is this a closed circle? I hear all the skepticism also mainly coming from those who haven't caught this big rally.
Since a bubble is a is a bull market that I called golden bubble. Tracy calls it a boom because of the difference. Exact inherited a bunch of exactly.
I should just mention we're recording this on September twenty, I.
Like that, right before, right before Power speech, right before Trump speech.
So just on AI and the sort of self dealing circle is circuitous, incestuous relationships. Perhaps one of the reasons we like talking to you is because you talk to a lot of clients and so you hear a lot of feedback from the byside as well, What are people looking out for in terms of saying, okay, this is a bubble, because it seems like, all right, people have been talking about high valuations for a really long time.
The stock just goes up. Is there something else that people are like watching for, in which case they might say, actually, we're going to start cutting back positions.
Excellent question. Almost like two months ago, I was hearing more. I'm skeptical, but flat cuts are also coming. You can't fight this now, especially from the pros who've been around nineties and beyond. I do hear, Look, this does feel a bit like end of nineties, beginning of two thousands. By the way, the year your peak is very important there, but we may still run. That's one thing that more seasoned equity beyond macro pros are saying. I also it was a bit the beginning of my career, but I
was around in late nineties, early two thousands. Then the denominator almost didn't exist in this valuation discussion. There was hardly any cash around. Everybody stuck Joe dot Com. It's excellent in B two, be even better in B B two C. And of course Hindsight is the world's top
page one, but you could feel it. Whereas this time around you can question one hundred billions thrown around in a circle, but you cannot question much the revenue the cash Jensen Nividia open Ai is bringing to the table,
¶ Tech Bubble or Real Earnings?
you cannot question much. Let's go beyond Nividia a bit into Magnificent seven, Microsoft's Apple alphabet. They have customers. All of us are are their customers. They make money. So and in a way called talking about circle more posted way of more glass, helpful way of looking at it. Nidia is the big champ. Okay, but take ni Media aside. All of a sudden, oracle became a story for reason. From oracle, we go to alphabet because for this time
around Judge decided favorably on chrome. The story continues, move from one I said to another. Also, yeah, Nividia is doing great. We'll talk about how Nasdak the Heracules is catching up with my blue head Mega. But it's a leave spinning like NI Media is not the top stock in SMP today, talking about waiting for Godo. Finally, small caps rolls up since the famous now jacksonvill and another
famous jacksonall Dowis speech. So it's not just one one one guy is very important November nineteen me media earnings are very important, but it's not just one stock.
By the way, Ozon was regaling us or showing off his make Europe Great Again hat, it's signed by Mario Draghi. If I own that, I'm very jealous. I would not be carrying it around. I would be carrying it at a glass case. I'm selling it maybe for eBay.
You'd have it in the vault along with your gold coins.
I would have it in the vault along with my goal.
But I thatsk how much I did respect my clients. I want to show.
Off before we can go further. Actually, for listeners who maybe didn't hear previous episode with you in April, can you just give us a little back. You talk to everyone, you have these dinners, you afford you an incredible perspective on what a range of people on the street are thinking about. Just so that people can understand your perspective and where you're coming from. What do you do like on a day to day basis, Who are the range of people that you talk to and how do you interact with them?
My job is to talk to my bank's top institution clients. He funds real money, but also because of experience, talented relationships, going going deep. This also includes now sotore on wealth funds, key private banking institutions, and I love as you know, I'm a person who tries to bring things together. So in these roundtables, small or bag, it's not just edge funds, it's not just real money, it's not just sorro and
wealth funds. All of said classes, credit rates, efs, emerging Marcus my proud Terro equity of course, so they learn from each other as well. Because we talked about in these shows and equity perspective can be very different to a race perspective. Right as we speak again, we're in one of these doll drums on if you define macro just as rates and fcs, it's almost like a magnet. Four to twelve. Okay, we try we on us tanyar. We tried below for pard for twelve, four thirteen, four
to fourteen. As Stacy said, we are recording this on September twenty three at nine am. In three hours, share Power will speak. Let's see if he changes tone or six to his so called Howkish presser. Some people hope that may again ignite a little bit of the other stronger rates, higher tone. Otherwise, volatility in effects and rates are struggling. Meanwhile, equity is continue to do better and better.
And back to your question. Different sets of clients coming to my roundtables, coming to my realm, learn from each other on why differents classes act different.
So you mentioned the dollar just then, and of course you have a very international group of clients that you're talking to. Can we talk about the dollar drop this year? Because I think it's really important and even though it gets some attention, it's nowhere near enough because we're talking about stocks rallying, US stocks rallying. Things look a lot different when you start to adjust for currencies. How are people thinking about US assets in light of the dollar drum?
Very fair, I'm tim Odlass. So I also remember last time we met is April sixteen in London, so just a week before the big fear You're dollar was right around one eleven. We were beginning to sense that this could be a historic here in terms of this dedorization. He fund ratio is changing, but we swift the mood beyond one fifteen as well. Now looking at the picture, two things are very important. First of all, the flows back to our friend Nividia, back to our friend magnificent seven.
Because one pushback from some of my especially fast money friends, who all either smell, want, or wish a dollar squeeze after such a soft dollar move is what will the flows do? World continues to buy Nividia's and Microsoft's do they buy it hashed? So I was a little bit skeptic on that. By the way, flows are back, so a big difference to Aple sixteen. I'll talk we can
talk about that as well. Retail led rally. Look where we are all time high my research reports and claims again George Servelos that in the last recent thirty forty five days or so, those laws almost eighty percent of them are heged, so people are buying their Nidia haged so believe it or not, eighty percent is a big number, say seventies eighty sixty. That definitely helps the soft dollar side of things. What continues to help is, of course
institutionists decreasing their exposure to US. Like hindsight I said rightly on that April sixteen, nothing to end the US private site exceptionalism. Nidia's microsofts so far are fighting back the tests of deep sick, even though champion of the year is China Tech in terms of performance, but from Asia so Nordics big funds are reducing their dollar exposure a little bit seven to sixty five, sixty to fifty five. That makes a difference. That made a difference.
This is really important. I think we should just continue on the specific line because what it sounds like is all around the world you have to have dollars to buy in video, and video is a stock that's sold in dollars. It's profits are denominated in dollars. It's sales. It sells things in dollars, and that's the same for all of the mag seven include Microsoft and Apple, and all of them are doing phenomenally well. They have real profits,
real earnings and so forth. They're very excellent businesses. And it sounds like basically all around the world people want exposure to a handful of extraordinary US companies. They just don't want to take the risk that the denominator and this time we're not talking about earning but that or that the dollar that they trade in or selling, et cetera, is going to go down further. So they want everything
¶ Dollar Drop, US Asset Hedging
about this. They just basically don't want the US sovereign exposure that's connected to these American domicile companies.
Completely correct, and honestly, I was a little bit skeptic. I wasn't sure. If you told me Osan this year, this big surgeon back in NI media Microsoft won't happen, then I would feel even more comfortable with the short dolar position. But Magnificent seven roads it may even pass Mega despite that is also remaining sort so whether I was skeptical or not, what you explained is happening. But I think for the next legs are included. A lot of biensy site are calling for one twenty one, twenty
two light levels. You need now the European side of the story or whoever you want to talk about Japan, China, the lagger side of the story FX is too legged. We talked about why the dollar side of short dollar worked. We need now a bit more help from our European story Tersea.
You know what strikes me is interesting about this, which is that when we think about countries where there's political risk and so forth, we don't often associate them with the most impressive enterprises in the world, right, And it strikes me that that's the tension we're talking about here, is that there's all this anxiety about the US as a sovereign for all kinds of reasons. That's not unusual.
Other countries have sovereign risk. They're just usually not home to literally the most impressive companies in the world.
No, and it is true that most of the investor nervousness around the US has shown up on the sovereign.
Yeah, not the corporate sete, rather than the corporate.
Side, which we've been writing about in the auth Loots newsletter.
Which everyone should subscribe.
To it, Yes, seamless plug just then. Okay. One of the other I guess big questions about the market right now is there's clearly nervousness about fiscal dominance and Federal Reserve independence, and that is playing into the drop in the dollar too. And yet at the same time stocks seem to be taking off and a lot of investors don't seem to be that nervous, at least on the equity side. What accounts for the discrepancy there the two.
Different roles pluging about plugging. I also love the New York Times piece. I think you guys deserve all the trust me, all those trans clients, they listen, they are very excited when I'm on now. Tracy definitely hit the right point. Deed organization is one key big team going into the end of the year. Fiscal dominance or not and the famous fed independence. Those are my second and third key topics. By the way, where where are tariffs? All the way down to four? I forgot about dominance,
So we talk right. I love brainstorming with you guys. Remember what I said in August as well summer everybody was everybody like some key investors, especially fast money. We're gunning for from my deer islands. Four key trust moments in four countries at the same time. What does that mean? I mean trust moments. We said, you know what I'm talking about, long hands getting out of control for people's For Marcus.
Big fisical, US, UK, Japan was the four for the.
Right Reasons Europe book for Right Reasons because ramp up the German span will come at the end of the at the end of the year, et cetera. Some key investors were asking, well, one trust moment, we know how we handled chance. Later down prime minister goes different sets of policies. What happens if four goes at the same time.
And we tried this on talking about dates September two, when you guys came back from wherever you came back from on the long final fine and final, long location, long weekend, UK Gild's big move, followed by France because the Prime Minister was about to go in six days, joined Tracy. How long did it last? Four hours? That long hand sell off lasted four hours And I'm not trying to be funny. Basically since then US thirty years, Europe,
even UK has been much more under control. Up until the Hawkish presser almost threatening below four percent, even more than short dollars Tracy over the summer and inter fal what were the real money and dhe funds common fail with trade steepeners, steepeners, steepeners Europe, US, everybody and their
¶ US Sovereign Risk, Corporate Strength
brother had steepeners first for different reasons. On Us more due to the short end that sooner or later will come to the Fed independence, the Trump side of the equation would win more. Finally, the powerwood caving cuts would come in and on the European side even more popular because of the long end German spending coming through in
October November, and people believed in their steepeners. First, US got hurt to nfp's myths, long hand moved big flatteners, hurt gold aside whenever you say, or Nividia side, whenever
¶ Fiscal Dominance and Fed Independence
you say, somebody says a trade is untouchable, watch out. European steepeners were supposed to be untouchable. Two days after that flattening washout in US, Europe also got reduced and since Tropkish pressure, we're more balanced onto Fed independence again. Justice Morning of the Press mattter raskin my head of US race strategy previously from the FED. Very respectable analyst wrote about this FED independence sphere not being in the price, not in the break evens, not in the term premiere.
Why I think a little bit, because so far, let's die right into it if you wish. I think this cut is justified in my mind. Even if they cut fifty a week ago, it could have been justified talking about some deer clients friends public So I may say Reek reader publicly on TV and on his writing set, they may and they should cut fifty because I think if they sold the revisions in June and July, they probably would have cut in June and July and going forward. Okay,
they cut twenty five. Not only they cut twenty five. Miran did this thing probably that's the dot. But Waller Woman stuck to twenty five. Even some of the previous FED governors racing for the job. Bullard says they should have done twenty five. So people are thinking and hoping that there's still some fading dependence. Powell, even though he's the past man, has some control over the situation. That's why you're not getting any fading dependence.
Feed on the long ends, Joe, it is interesting and I would not have expected this earlier in the year. But if you look at the move index, so the index of non market volatility, it's going down. It's gone down quite a bit, which is not exactly what you might expect to happen when we're talking about things like physical dominance and federal reserve independence. But there you go.
That is a good chart I haven't looked at in a long time. I want to go back to the gold conversation because we've kind of been dancing around to We're like, oh, political volatility in the US and sovereign risk in the US, et cetera. But like, let's talk about like gold in the US or gold and the dollar. Like when you talk to clients, setting aside that it's a good trade, people want to ride a good trade, et cetera, how much fear anxiety, et cetera is there
about US political constability? And what are the and I mean a prominent political commentator got assassinated recently in the United States. Sadly, what are people at your geners maybe inside the US or outside dinners saying about the US when they look at our country.
That's why more and more countries are building up their reserves in gold shying away from a dollar more. My motherland Turkey is an example, again publicly known in terms of reserves. Also, let's remember what is still going on versus Ukraine and Russia, the sanctions that Russia faced or may face, so different countries are also because of that
leaning more towards gold. So besides our macro discussions ups and downs of rates, that's uncertainty, that question mark over US policy, that question mark over geopolitics leads central banks to accumulate more gold. Joe for gold to go down. The game should change. Like this year, my plan is going all right. Again, I was on air. I thought these big sipner transformans long aans crushing everything wouldn't happen.
I didn't expect this much of a comeback. But again I said there would be a comeback, especially retail, much more than pros belied in this nimdia gold go hand in hand together. There should be something off the left field, for example, maybe on tariffs. All of a sudden, tariffs tongue in cheek, Tracy are a bit too good boy revenues. They raise a lot of revenues. Twitter talks about the TV's talk about the Torton Stock talks about it if Supreme Court at whatever time, and that's also very key
when they make the decision Walt's against. I'm sure they may. I know, they may use S three oh one, et cetera, but will be all of the big that's the question mark. Now, what will the Trump administration do? What will best send to long aance can get going again, And even though it's got nothing to do with necessarily Nimidia and gold, the year's path may change and things like that can take us off the.
What about a big handshake with Chision and a new I mean, I don't know what it would be. And you know, my dream obviously is for a by D factory in Tennessee one day, show me factory, et cetera. But could that be a oh, this charge is in a new direction, something that is like a real let's reset this relationship. I'm not optimistic, but would that be the type of thing that could reset the trajectory of certain markets?
You talked like my Joe, like a globalist Tennessee factory by D. I mean that's not the pulse at the moment, but sure if that happens, my gut feels still says a short lived correction. But yes, that's that's what did I say. That's not too pulse, That's not the New York pulse at the moment. It would be a positive spice,
¶ Geopolitics and Gold Accumulation
a little bit less scared of things spies and yeah, it could see that eating.
So I know it's number four on your list now. But we should talk about tariffs a little more. And I take the point that it could be a revenue generator for the US and maybe that provides some support on the bond side of things. But on the other hand, I think most people would argue that it would slow economic growth, which should be a drag on the equity side. But we haven't really seen that. How are people talking
about the actual impact of tariffs right now? And I gotta say, Joe, I got my first customs bill over the weekend. It wasn't too bad. I think it was like sixteen dollars or something, But I feel them personally very fair.
Comeback. I yess, especially fast money crowds hasn't necessarily given up on ceculation. My takes for part of the reason why all these new media gold long end calls have been correct. I like to fade the inflation hulks, and I like to fait the big recession bears, who are much more quite these days anyway. But yes, if continues to stick to them, even though on one hand they generate revenue and keep the long end under under control, there may be a growth impact on the other side,
accompanied by splice side immigration effects. And the jury is out there on dear mister Waller, whether led by him, whether this is the famous world the words, whether this is transitory or not. More and more some clients start
¶ Tariffs: Revenue or Growth Drag?
to say, my binkie, the famous chief global economists start to saying, maybe this tariff effect wasn't as bad, both on growth side and on inflation side. These people immediately get a pushback early days, early days. Let's wait, so will companies continue to eat them and not pass that much to the traces of the world to the customer, especially when we talk of beyond ten percent terrists which most countries face next year. Your country faces are very
key midterm elections. So I think Trump and Bessent know that they got elected because of inflation. So the moment the tacflation camp starts to look like they are proving correct, even look like a bit of a climb on inflation more so down on growth. I think we may we may get more and more taco because they want to win those midterm elections, then they will take more and
more steps over on race. But if they prove correct, if it's not reflected on the customer, if inflation continues to remain Okay, I know it's not two percent, but below three percent, maybe this statistical continues.
Sorry, did you just call pinky Chata my pinky?
You have?
Even like when we there's a lot of preparation going for these macrodners as well. Trust me, when he sends his questions and his keybouet points, he tells me to start with my binki.
I don't think we've ever heard him on the party. We Gotta Yeah. I talked to him a couple of times on TV. A big fan of his. We Gotta make that happen. When you think about the US economy and maybe the European economy too, but I think it's
US and you think about growth prospects. This is something I've been asking a lot of people about, like how much do you think the US economy as a just the forward momentum of the US economy, especially over the course of your career, how much has it become dependent on this perpetual rise in asset values And you think, like, do we need a booming market year after year just to keep that sort of like consumption demand engine, investment engine going.
Well, yes, it's the short answer. I think the details are even more complicated a bit sad. I think you need you we need in this game that's eating it. The next thing it was B to B B two C three decades ago, three D. Now of course AI AI AI the past three years. And also US, I mean again as the country that gain my education right in more open times, for that relies on growth, relies on animal spirits, relies on those classes to go higher and higher. And that's why the Tacy question from like
ten minutes ago. It's very key whether we're at you know, we're getting their stage of the bubble or we're at the bubble, because if that bursts, economy can get effected as well. Also, Joe, I'm a big believer in the k economy, the whole terminology of that. So I said this again before on your shows. World may be more okay for whatever we define ourselves as one percent, five percent point one percent. There's a much bigger part who are struggling, definitely on us, but globally as well. Some
again it's a statistics thrown out there. These days, ten percent of the US consumers accumulate almost fifty percent of the consumption and the rest much less. Valve effect is getting bigger and bigger. When I was in college running around in this country, again, we were talking about the valve gap. But now this becomes relevant, even macrorelevant. That's why people like me are okay with the Rade cuts, risk management or not.
When you encounter Americans in London, or Americans in Europe or anywhere outside the English many in Europe, do they bad mouth US policy? Do they like talk about how terrible and like how much our institutions are deteriorating, and how we need to get back to that sort of like good old fashioned IMF orthodox economics of the good old days.
Okay, let me get the past from Kobe and do a bit of a shack look they do, especially if they have liked me born and read emerging markets, but now trading the whole wide world, and if they are Americans during my beautiful, beautiful world, they are affected like when they hear conversations like this, they understand when they traded Turkey are hungry Argentina and say, okay, because of this politics financial repression, I don't believe it. That's why
I'm selling the currency. It was easier to do for somebody else's land and currency. Now both it's hurt them a bit. And also it becomes a bit of a dilemma. Right. They may continue to criticize some of the things that are going on, but for the arguments that I laid out, risk parity at least depart continues to do okay, and US ten years still is not going to six percent. It frustrates them. This brings me to not in the mine are big, big ones, but big thematics A key
point going forward, much beyond the fourth quarter. What's going to win the trust moments my symbolic way of saying, fiscal dominance or financial repression. Again, somebody who's experienced in these Turkeys, hungry Argentina's of the world, what does their mister bestan say? As a former client friend tell a friend banding the curve, he literally said, I'll bend the turf.
We will take care of the curve. You know yet banned even not take care of maybe true like they do, being very watchful over the auctions, making sure auctions go very well, which they have been. One tips auction a side, maybe through buying much more on the short end vice versa buying more on the on the long end, to make sure that those rates stay under control. Operation twists
are eleven twelve. They may win over majority. Is taught that fiscal dominance women, my god feel continued to say, don't necessarily bet against whether you like it or not. FED and Treasury working more closely together on this ala us financial repression. Going back to your questions, some clients that Americans I meet in New York, London or Saint Paulo are a bit taken aback by saying, AREIC becoming a bit emergent marketized? What do you mean by Treasury
and FED working even closely together? This is not two thousand and eight two thousand and nine, But so far those to bet towards that tols to bet with, mister bethsand did better on their longan US views.
Speaking of the wide world, what are your clients saying about China in particular? Because you know I'm looking at a very good Bloomberg story on my screen right now. China floods the world with cheap exports after Trump's tariffs, and I think they just posted a record trades surplus.
And there was another good article is from More Worrying China wanting to be a gold storage hub was really straight.
He did become a gold goldic.
Doing a Switzerland.
Yeah.
Yeah, and the free point.
But on the other hand, you know, growth has been slowing in China and there is deflation, but if you look at something like the Shanghai composite, it feels like
¶ US Economy's Asset Dependence
people are starting to get a little bit more optimistic. What are you hearing?
Three parts of that. First of all, China as an asset class, we have it here as alongside Golden emerging Marcus Champion of the Year in December, November, January earlier. Everybody and their brother a bit like this, not a bit like the steepener trade of this August early September, it was the top trade going long dollar CNH. These tariffs lightisers, they will be the toughest on China. There is no way. All the dollar CNCH calls were both starting with seven and a half flights at eight all
of that didn't materialize. Okay, we didn't go to six ninety six eighty, but the NH is appreciating talking about the day we made April sixteen. On April nine, the big fear was on that morning when we questioned the system April nine morning, China would devalue big time, big bank.
They didn't do any of that. And currently my head of Greater China Trading ten who named drop nice to call this China Take and nah Rally thinks that and with his research, RMB strength has more legs to go because whenever they go around the world, Peru ports Brazil
amazon forests following the China corpus. Back to our discussion, these guys are full of dollars out of their ears and now for discussions for the points that you mentioned, they want to hage a little bit, so they want to sell their dollars a little bit and that's a big factor. So that's I think China Take will continue to be the champion asset class. Gone to my head, maybe not going to six ninety six eighty, but I am still betting with CNH and R and B strength
over the dollar strength. One of these leggers of the year will do better to the world effect. You guys actually bloomberg at a great piece this very morning, like Tracy said, on exporting this inflation. So two big countries in this world are American are China. Mister Trump is doing what he's doing on the tariff side. These other
¶ Is US Becoming "Emerging Marketized"?
big countries of the world don't necessarily fight with the other big giant in the world stage. So those cheap cars are coming into Europe than beyond and that is a macro factor. Why because ECB back to blue hat. Now they're done. Madame la Guarde very definedly says they're done for now. Madame Schnabel for now is winning the discussion. Even Lane is sounding a bit more like her, more hawkish.
Let's see they don't we maybe we don't have an inflation problem painting below two percent if anything, my Mark World Chief European Economist thinks it may go lower to one point six to one point five. If that happens, Let's see what their twenty is come December, come January. If this China contries to export to this inflation, maybe, even though they don't say it now, they may have to end up cutting. So that's that's a big factor for the European story.
Joe, we should have asked Ozon to wear his europe hat for this entire interview.
I know it's a cool hat. It was a time advice y of Global Macro at Deutsche Bank. Always a pleasure meeting up with you. Always seems to be an exciting times in the market. Also, if we like talking to you because it's just a list of deutsch Bank analysts, is like, oh yeah, we need to talk to that guy. We need to talk to that guy. Yeah right, good sales anyway, Thank you so much.
This was great. Thank you so much.
I love catching upon for all kinds. Always really fun. He's a great read on one of the popular trades for right now.
It's just the talking points, right, and the talking points this idea that you know, we we don't talk.
About the Chinese market that much in terms of the stock market. We do a little bit. But the idea that from his perspective, long China is up there right now with all the big ones in Nvidia and Gold and up until recently the steepener, maybe that's fallen off a little bit because it hasn't worked as well. That this is one of the sort of top tier consensus trades right now, something that we should probably talk about further.
I also find it interesting that tariffs have fallen from like number one on the list of concerns to like number four.
If that no, that's totally right. I mean when we talked to him, that was middle of April in London or early April, I think, and so it was all about tariffs. And yet despite the fact that tariffs are not top of mind for a lot of traders apparently right now, it is interesting that still this idea too, we don't really want to have exposure to the US per se. We want to have exposure to US companies, but not the US per se. That's all part of the story.
Speaking of which, another really good chart to look at right now is gold versus real rates. So you can bring up like tip yields or something like that, and
¶ China's Rise: Asset Class, Trade
you can see there used to be a really strong, almost one for one correlation and that's broken now.
It's very interesting, right because it suggests that there's something else going right right, because it's very easy to say, okay, real raids, et cetera, they're going down. You want to like, I think it's that sovereign's sovereign concern. It's like something deeper, and it may be deeper to a lot of different sort of you know, Western governments and Fiat currencies and so forth. A lack of trust. Maybe something that doesn't show up in a traditional market showing up in gold.
I do think that's really important.
Yeah, all right, shall we leave it there.
Let's leave it there.
This has been another episode of the Odd Lots podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway and.
I'm Joe Wisenthal. You can follow me at the Stalwart. Follow our producers Kerman Rodriguez at Kerman armand desh O Bennett at Dashbot and Cal Brooks at Keil Brooks. For more Odd Lots content, go to Bloomberg dot com flash odd Lots, where the daily news and all of our episodes. You could chout about all of these topics twenty four to seven in our discord Discord dot gg slash out Lots.
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