Mikkel Rosenvold
3 weeks ago

Macro Sunday: Will We Ever Have Peace With China?

Join the team this week for a discussion on the PCI report, Chinas weather, the business cycle watch & much more. Guest: Marvin Barth - Thematic Markets.

Introduction: Mikkel Rosenvold introduces the show, mentioning the presence of Andreas Steno, who joins from Greece, and the main agenda, which includes an interview with Marvin Barth from Thematic Markets, discussions on China, geopolitics, the recent CPI report, and the current business cycle.

CPI Report Discussion: Andreas Steno analyzes the recent CPI report, noting that the softer-than-expected shelter costs have led markets to view it as dovish. He explains that this could support the narrative of continued disinflation, allowing the Federal Reserve to consider rate cuts later in the year. However, Steno emphasizes that core services inflation remains high, suggesting that inflation is still too hot for immediate rate cuts.

China's Industrial Production: Steno discusses China's industrial production, which he believes is back to pre-pandemic levels, based on air pollution indicators. He highlights that official Chinese data often underreports economic activity. The increased air pollution in industrial centers like Beijing and Shanghai suggests a significant rebound in production, driven by strategic manufacturing sectors like EVs, solar panels, and wind turbines.

Copper Market Analysis: Steno and Rosenvold discuss China's strategic stockpiling of copper and other resources, possibly in anticipation of a CNY devaluation or as a response to U.S. tariffs. Steno notes that China's maneuvers have tightened the physical copper market, causing prices to rise. The U.S. might need to consider building a strategic copper reserve, given its critical importance.

Freight Rates and Shipping Volumes: Freight rates have surged due to constrained shipping capacity and seasonal demand increases. Steno predicts that continued geopolitical tensions, such as the situation in the Red Sea, will keep freight rates high, impacting goods inflation. The lack of passage through key shipping routes like the Suez Canal exacerbates supply constraints.

Marvin Barth Interview: Marvin Barth discusses the broader geopolitical landscape, emphasizing the interconnectedness of global conflicts. He argues that the current geopolitical tensions are not isolated events but part of a coordinated effort by countries like Russia and China to challenge U.S. dominance. Barth highlights the strategic importance of state-directed economies like China's and the potential long-term impacts on global trade and stability.

Business Cycle Insights: Steno provides insights into the current business cycle, noting a recent soft patch in April but expecting a rebound in May. He believes the manufacturing sector still has upside potential, and commodities, particularly oil, remain attractive investments. Steno emphasizes the importance of timing and staying informed through their trade alerts.

Conclusion: The episode wraps up with Rosenvold and Steno encouraging listeners to subscribe to their services for more detailed analysis and trade ideas. They highlight the importance of diverse perspectives and ongoing geopolitical and economic developments in shaping market strategies.

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