Equities Are Back, Baby...! ft. Andreas Steno
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Companies
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Key Quotes
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Topics
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Insights
🎯 Summary
Podcast Episode Summary: Equities Are Back, Baby…! ft. Andreas Steno
This 65-minute episode of The Journey Man features host Ralph Hau interviewing Andreas Steno of Steno Research, focusing on the intersection of macroeconomics, business cycles, technology, and crypto. The core narrative revolves around Steno’s successful investment framework, which prioritizes liquidity analysis over traditional indicators, leading to significant outperformance this year.
1. Focus Area: The discussion centers on Macroeconomic Business Cycles, Liquidity Analysis, and Investment Strategy, with significant tangents into the technological drivers of future growth (AI/Automation) and the “debasement trade” encompassing Bitcoin and Gold.
2. Key Technical Insights:
- S&P PMI Superiority: The S&P PMI is significantly better (roughly twice as predictive) at forecasting actual services and manufacturing production one quarter out compared to the ISM PMI because the S&P survey focuses more on domestic trends and has a larger sample size, capturing more SMEs.
- Three Sources of Dollar Creation: Understanding macro is simplified by tracking the three agents that create dollars: the Federal Reserve (Fed balance sheet), the US Treasury (deficits), and Commercial Banks (lending/leverage). Current liquidity expansion is driven only by the Treasury and private banks, not the Fed.
- Japan’s Yield Curve Signal: The steepening of the Japanese yield curve is incentivizing Japanese commercial banks to lend again (releasing “animal spirits”) by restoring their ability to profit from the carry trade (borrowing short, lending long).
3. Market/Investment Angle:
- Liquidity as the Prime Driver: Steno asserts that liquidity is the single most important macro factor driving markets since 1997, making the current environment the “greatest and easiest macro risk-taking environment of all time” because the game (liquidity focus) is now clear.
- Forced Capex Cycle: Tariffs and shrinking labor forces (due to migration policy) are forcing domestic US manufacturers into a significant Capital Expenditure (Capex) cycle, particularly in automation, to offset labor shortages. This is a counter-consensus theme.
- The Debasement Trade is Mainstream: The recognition by major institutions (like J.P. Morgan, per El-Erian) that the Gold/Bitcoin trade is the necessary hedge against currency debasement signals that this trade is gaining mainstream adoption and participation is likely to accelerate.
4. Notable Companies/People:
- Andreas Steno/Steno Research: The guest, whose framework combining business cycle, liquidity, and policy analysis has yielded a 70% return this year without major drawdowns.
- Ralph Hau (Host): Emphasizes the nexus of macro, crypto, and exponential tech.
- Mohammed El-Erian: Mentioned for tweeting that major banks are now labeling the Gold/Bitcoin strategy the “base trade.”
- Swiss National Bank (SNB): Cited as an early mover, brilliantly buying tech equities years ago to counteract currency debasement, demonstrating foresight.
5. Regulatory/Policy Discussion:
- Policy Shift in Liquidity Creation: Central banks have deliberately shifted the burden of liquidity creation away from their balance sheets (to avoid inflation blame) and toward incentivizing the private sector (Treasury deficits and commercial bank lending).
- Incentivizing Automation: US policy, through tariffs and restrictive labor force growth, is effectively forcing domestic capital investment into automation and AI to solve impending labor scarcity issues.
6. Future Implications:
- The economy faces a significant labor force participation collapse in the next five years due to aging populations. This gap must be filled by automation and AI, accelerating the capex cycle in these sectors.
- The focus will remain on total liquidity, driven by private credit expansion, rather than traditional Fed balance sheet metrics.
- Global yield curves are expected to continue steepening as central banks globally (including the BoJ) adjust policy to encourage private lending.
7. Target Audience: Macro Hedge Fund Managers, Institutional Investors, Sophisticated Retail Traders, and Technology Strategists interested in how fundamental macro shifts are influencing asset allocation, particularly regarding the interplay between technology adoption (AI/Robots) and monetary policy.
🏢 Companies Mentioned
GMI
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investment (implied)
Pro Macro
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investment (implied)
Rocket Lab
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unknown
Robin Hood
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Pro Macro
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unknown
And David
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unknown
And China
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unknown
But Elon
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unknown
Because I
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unknown
Federal Reserve
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unknown
Lyndon B
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unknown
Vietnam War
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unknown
Treasury Secretary
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US Treasury
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US Treasuries
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unknown
💬 Key Insights
"The whole game is basically intelligence per unit of energy. That is the whole game we're in now."
"We've seen the Mag 7s, the big players, looking for capacity further down the supply chain. The best example of it is the deal made between Microsoft and NIPUS, where they basically purchase free high computing capacity from NIPUS if needed, right? So, and a lot of these players like NIPUS, Mara, Irene, they've started leasing out their high computing capacity. So, this is the Bitcoin miners."
"When you look at the equation seen from Japanese soil, if you want to buy, say, a 10-year Treasury, you need to take into account that you need to hedge the dollar exposure back to Japanese yen when you buy this 10-year Treasury. And the cost of doing so is roughly equivalent to the spread between three-month bond yields in the US and three-month bond yields in Japan."
"The one way that you can ensure that foreign investors, institutions like life and pension funds, sovereign wealth funds, etc., can buy longer-dated US Treasuries is to ensure that the short-end bond yields are very low."
"I actually think that the capital allocation will prove to be more efficient when you do it like this. So, it's actually to prefer compared to a central bank just expanding its balance sheet to provide liquidity because banks are better credit assessors than central banks are in many ways."
"they've agreed that this is the only way: you have to allow the banks to take the slack because they hamstrung the banks so badly after 2008 that the government had to finance everything. And now they've said, okay, that can't work any longer because everyone knows the game. So, we're just going to move the whole thing out to the private sector."
📊 Topics
#artificialintelligence
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#investment
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#aiinfrastructure
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