Is Risk-On Too Risky? | Macro Mondays: August 31, 2026

Macro Mondays with Andreas Steno & Mikkel Rosenvold And summertime is maybe good. Summertime is maybe shit. It's Macro Mondays. Speaker 2 It's Monday. Kevin Warsh Turns Hawkish: Should Investors Pull Back on Risk? It's time for Macro Mondays on Real Vision. My name is Miguel Osman and as usual, I'm joined by and Playa Steno. Welcome to the show, Andreas. Speaker 1 Thanks, Michael. Good to see you. Speaker 2 Yeah, you too. So does. I'm going to dive right into it and then we're going to catch up a bit more on the Kevin Walsh speech and everything. And Dad, take a deep dive into it. But let let's get the headline straight here. Surprisingly hawkish rhetoric? Maybe from Kevin Walsh, at least in the opinion of many pundits. Is this the time to pull the brakes on some of your wrist treats, Andreas? Let's start there. Speaker 1 No, you want, you wanted a yes or no, I guess. But I'm, I'm, I'm, you know, the longer answer is that I'm more in doubt than a week ago. Speaker 2 OK, Andreas, we'll we'll dive much more into that Jackson Hole speech and the outlook for for equity markets. We're going to take a look at the the state of the US economy in the the warsh best war going on wars perhaps a bit bit much when we look at what's going on in the Middle East, that's a true war. And then we're going to talk a little bit about that if the war is restarting with the attacks on the Zaka Island that we have over the weekend. Andreas, always great to learn new geography when the geopolitical show goes worldwide. So, Andreas, I know you run a language processing model on the fete sentiment based on the, the the the actual words uttered by whomever is in charge at this point. Kevin Walsh. So could you maybe in the light of that, what did you learn from his Jackson Hole speech last week? What Warsh’s Jackson Hole Speech Really Changed So, you know, at at first glance it was admittedly A hawkish speech, but was it more hawkish than what we've seen from, you know, various of of the lieutenants in the weeks prior to the Jackson Hole? According to this language processing model, no. And that was actually quite a surprise to me when I ran the numbers. It wasn't more hawkish than what we've seen from the Fed over the past few weeks. It wasn't more dovish either. It was more or less just the same. I guess the true surprise for many if we look at market pricing was that he didn't really lean into the soft inflation prints that we've had say in July for example. And in contrast to what he said during the July press conference, he essentially re established, you know, crystal clear guidance around the PCE index being the one to follow or the one to track in terms of inflation, which was, you know, up in the air. To be honest, after that July press conference, he talked about new measures coming it. It wasn't clear to me whether the inflation mandate was strictly tied to the PC index after that press conference. It is now back to where it was ahead of that press conference. We're watching the PC index and the PC index looks hot. There's no doubt about that. PCE vs CPI: Which Inflation Signal Should the Fed Trust? So the big question here is whether the PCE index is onto something relative to, for example, the CPI index. The CPI index, another inflation measure, is a lot softer than the PCE index right now. And obviously, since worse has now put the PC index back in the limelight, I've spent my weekend digesting that exact inflation number. So what do we make of this extreme divergent between PC and CPI? And it's on page 7 in our slide deck. And remember, you can download the slides after this. Well, if you look at it in core terms to begin with, we're talking about the second, second hardest spread, so PC higher than CPI since 1960. And we only have one more extreme observation that was in 1983. And how do we characterize 1983 from an inflation standpoint? Well, it was an inflation that fell off a Cliff. Basically. It was an inflation landscape that went from very hot to a lot that's hot. I think that's very fair to assume that it's the same case that we have now given this, you know, historical study. My best assumption, and I've reiterated that for at least a handful of weeks in a row now, is that the CPI is the directional guide, while the PCE is slower in, you know, changing inflation regimes. And you have, you know, there are quite a few. There are quite a few reasons why. I mean, the PCE adapts a few of the categories from the PPI index instead of the CPI index. It has less focus on shelter costs and shelter costs have looked very soft over the summer. Those are some of the reasons why the PCE are much prints at much higher levels than the CPI. So, you know, All in all, I'm tempted to say that he kind of solidified the mandate around PCE again, right when the PCE is about to roll over. So what does that mean for the outlook? I think it was Morgan Stanley, one of the big investment banks that wrote as a take away from the speech that if Walsh does not hike interest rates in September, he's at risk of of a sort of a cry wolf event now, right? That he's he's crying wolf around inflation without really committing to anything. At some point you need to commit to doing something about it. So he's reiterated that we want inflation back at 2%. That is our strict mandate given the current set up, inflation is more important than jobs and blah, blah. He said the same thing again. So at some point, of course you need to respond if the inflation index is printing at higher levels than what you're mandate tells you to to bring it to right. Warsh vs Bessent: The Battle Over Rates and Bond Yields And I kind of have sympathy for that in in in case he doesn't do anything in September, we'll like to see another curve steep in the event where the long point you goes up in contrast to watch Scott Besson has been trying to orchestrate over the past few weeks here. So in that sense, there is this, I won't call it a battle between wars and Besant. It's not like they're fighting each other in public. But there is, you know, a tit for tat on going behind the scenes. And we'll have we'll have to see you who comes out on top. What I'm watching right now, and I think that's maybe the most interesting take away from a risk asset perspective is how does Scott Beson respond to this? Because he's basically promised to double up the buybacks of long bonds. But he's he said at least double up. What if he triples them or quadruples them or 5X the media? But he can do that. Yeah. And we'll get the first sign of what, what he intends to do next week. So I think it's on September 9th. There's this a buyback operation, right? So my, you know, my gut feeling, you know, we're talking about trying to forecast people with weird incentive structures right now is that he'll he'll buy more than double up to try and send a signal to the bond market in in nine days from now. But we'll have to see. And then, then it's true, you know, tit for tat between Wars and Bessenger. Speaker 2 Absolutely interest. One thing I just wanted to dive into that maybe I'm reading too much into it, but I, I as I understood Kevin Wars, she said that interest rates at the current level are maybe containing inflation and and simultaneously not hurting the economy, not hurting the AI build out. Is that a fair way of putting a A? Speaker 1 Yeah. So I mean, he, he kind of, you know, when, when he discussed financial conditions, he, he referred to the data center build out as not hurt by current conditions, but he referred to, for example, agricultural, you know, farmers and, and agricultural goods and for example, housing being hurt by current conditions. So it kind of matters whether you talk about one part of the economy or the other, but. Speaker 2 My question was, doesn't does this open sort of a slimmer of a window if we begin to see hiccups in the AI trade as a result of interest rate fears over the the the the level of debt being being used to, to accelerate the AI? But does that open any sort of window or am I being too positive here? September Rate Hike: Is the Market Overreading the Fed? Well, you know, I, I think which is basically refers back to the question you asked to begin with, I think there's a risk that we see a set back into a rate hike, right. If, if we get a rate hike in September, it's it's not done and dusted if you look at at the market pricing, but it is, you know, approaching at the base case for many. It's it's like everyone has concluded that Kevin Walsh has forward guided the rate hike even though he explicitly says that he's not forward guiding anything but but it. Speaker 2 Was very explicitly the point that he wouldn't have forgot. But yeah, it's, it's going there even beyond the the, the coin toss levels, I think. Yeah. Speaker 1 But having having said that, right, it's kind of the market based case that we get a couple of rate hikes now, at least a couple, right, maybe even a tap more. So you know, a hike without any like clear message that we will get more and then we'll think that's a biggie now because it's already in the market price, right. Of course, if we get a rate hike and they kind of signal that more is coming, they probably won't, given that he's not forward guiding anything, then it's another question. But I am, I've, I've said it also on, on other shows and in our, you know, research papers here and there that I, I think the period between now and, and the midterms looks wobbly. I'm, I'm, I'm not sure we'll get a lot of direction for markets and then I think post the midterms will, will get a better environment again. Speaker 2 Yeah, that is sometimes when you see around the midterm. We we've written a bit about that. OK, rounding off on Kevin Washington dress and we'll we'll, we'll dive more into what we see in the economy here. I can't help but wonder, is Donald Trump OK with this? Is this what he would he thought he would be getting instead of Jay Powell? Speaker 1 Well, it's you could argue that it's the second time that he's hired a Hulk auditioning as a dove. Yeah. You know, which is, I mean, right, Kevin Wash was kind of hawkish when he was on the committee, had a great financial crisis. Well, he's pretty known for his extreme hawkishness just before Lehman went down, right. So having said that, you know, let let's try and assume the responsibility of Kevin Wash here, you and I, right. If if you entered the office with the backdrop that Kevin Walsh is entering the office with, wouldn't it make sense to try and solidify your institutional mandate, your credibility and all of that to begin with? Try to, you know, try to tell everyone, I'm not a puppet. I'll do whatever it takes to, you know, safeguard the credibility of this institution. And then as soon as you've established that you have the better chance of actually, you know, tilting stuff in your direction. I, I wouldn't rule that out. It's very difficult to forecast Kevin Walsh right now since he's not saying a lot, but you know, given the more medium term outlook for, for inflation, also given the analysis I laid out on, on the PC index, I, I, I'd say that it's decently likely that we have a very soft inflation window between Q4 and Q1. We could argue that 2027 will be a more inflationary environment. I think that's likely. But at least for now, I think it's, it's the base case that we'll see inflation coming lower into the end of the year and into the first quarter of next year. So if he delivers a hike in September and kind of, you know, tones down the expectations with whatever tools he's got in his toolbox, I, I think it, it's, it's a decent start for him. You know, he'll solidify his credibility. He'll, he'll avoid all of those accusations that he's just the Trump puppet. And then maybe he's got more to work with next year. I don't know. We're talking about forecasting again, as I said, a person with a very weird incentive structure here. It's not easy. And we're, you know, ultimately the big question here, is it enough to, you know, alter the trajectory of the business cycle if we get run one rate hike? Why One Rate Hike Probably Won’t Kill the Business Cycle No, I mean, we obviously did more to kill the cycle. It's it's not like everything ends with a 25 basis points back. So, you know, no, no, the, the, the big question here is whether is this a cycle of rate hikes or is it just sort of a mid, mid cycle adjustment? And I'm, I'm more in the mid cycle adjustment camp, if we get a rate hike at all. Having said that, I, I think, you know, I personally still think that we're over reading what he said on Friday. You know, why are we why is everyone chasing this as a forward guidance when he's explicitly telling you not to he. Speaker 2 Told us that he won't. He told us don't, don't look to me for traits essentially, you know, do your own homework. Do do your own trading. Don't just wait for me here. So yeah, he's trying his best not to become a meme. A lot like Jay Paul all the time. So Andreas, before we dive a little bit more into the the situation in Hormuz, just a few notes from our offerings at Real Vision. We're throwing out the free constant left, right and center at the moment. Obviously, Macro Mondays is free for you to watch every Monday, giving you a sneak peek into the stuff that we do on Real Vision. Roald Powell is doing his drinks with Sirius, which is also broadcasted free and YouTube. That's always hilarious to join. It's on September 3rd, that's on Thursday and 7:00 PM Eastern. And in case you missed it, Andres, you did. I know you didn't miss it, but listeners missed it. You sat down with Roll last week as well on his Journeyman podcast. So really absolutely worth, worth a watch that one. And obviously to compliment that and all, we have 3 flagship reports each and every week, published our portfolio update every Friday, your stand on Signals editorial every Monday, and then I published the drill geopolitical update on Wednesday and address. Speaking of geopolitics, we even though the war and the hormones have sort of fizzled out from a military political perspective, we're still seeing massive spillovers to to energy markets. Obviously the crack spread we'll get into in a minute. Speaker 3 So a quick break in your regular programming. If you're serious about your future, grab my free report called Prepare for 2030. US Strikes Larak Island: Is the Iran War Restarting? 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. Speaker 2 Then over the weekend, we heard that the, the US had attacked some rocket launches on on Lock Island. And, and, and just to give you an idea of how I assess situations like this, because that's also useful when these news hit and you decide, OK, do we need to panic about this or do we need to just monitor this? Right now the battle is about the Strait of Hormuz. So it's about a stretch of water, essentially. Speaker 1 OK. Speaker 2 So what was attacked on Lock Island? Rocket launches, yes, but rocket launch is designed to drop, to have the Rockets drop sea mines. So this was an attack aimed at limiting Iran's ability to disrupt the flow of traffic in the Strait of Hormuz. So again, linked to the Strait of Hormuz, this means that sort of in the strategic military thinking, you're still in the same arena. You haven't begun attacking ground troops or allied countries or civilian targets. You're still sort of in the we're fighting about the Strait of Hormuz situation. That gives me some calm here, even though the the Iranian response was quite, quite violent. I think Mark is over acting a little bit to this. But again, we are getting a getting to to to a point where the truck spreads and the continued impact on energy inflation is massive interest you, you, you, you labeled a good start to the economic D-Day. Strait of Hormuz, Crack Spreads, and the Next Inflation Trade I think the, the, the, the, the, there was a clever way of looking at this economic D-Day. But just explain to us and judge what you're seeing in this crack spread chart that we that that we use regularly. Speaker 1 You know crack spreads in dark blue. They kind of peaked right around that D-Day announcement you. Speaker 2 Have to. Speaker 1 Kind of kind of the same if you look at at oil futures and dated oil. So at least, you know, if we measure it from a market standpoint, it's also a good start. I don't know whether it works or not, but it it, it worked from a market perspective. Having said that, you know, technically speaking, I think it's a good zone to to short energy prices from this one. Also, since, you know, given this sine wave war where we go from peak to draft to peak to draft to peak to draft, it kind of works as a good entry to short energy prices just after an escalation, right? Rather than doing the opposite. It's, it's very tempting to go long oil when you've seen an attack, but maybe it's better to go short oil. So I, I have a short oil lean here. And Speaking of, of the impact of this, obviously the key to unlocking this disinflation that I've been talking about into early next year is probably to get some sort of 2nd memorandum of of understanding since there is a massive potential. You can see the gap basically here between the crack spreads and the oil price that is consumer disinflation ready to be unlocked as soon as we get that refiners capacity from the Middle East online. Again, as some have pointed to when I've shared that Intel, there is also an issue with the refiners capacity in Russia. I don't, I have sympathy, sympathy for that view as well. Just to to be clear, that matters especially for diesel. And we're obviously talking about Ukraine's striking refiners inside of Russia on a running basis. So I think roughly 50% of the refiners capacity is offline in Russia. It matters for diesel because they didn't ban diesel exports, while the lack of refiners capacity in the Middle East matters a lot more for jet fuel. Having said that, those two are obviously interconnected because of refiner can switch from one to the other. And yeah, what I'm trying to get to here is that don't go long oil when you've just seen an escalation. Don't buy the inflation story when you you've just seen an escalation. I think it is a good idea to you'll take the opposite side of that bet when markets start to price in the escalatory path, which was kind of the case as well with the D-Day stuff it, you know everything related to prices around that message because you know markets build up expectations of an escalation and then you get the fate from there. And I, I think this weekend's is kind of an example of the same. Again, you know, if we get some sort of products deal around the Strait of the Moose, we're talking maybe 4-5 months in a row of crystal clear deflation in headline terms, because we'll unlock a lot of, of, of that inflation coming from crack spreads. And you know, that would be the game changer for me because no matter how little sense it makes. Especially the European Central Bank put also to some extent the Federal Reserve, they will look at headline and face, even though it's very impacted by, you know, wars and stuff like that. And you know, what does it matter through hike rights if the oil is offline? Of course, you could try and impact the demand side of that equation, but you can impact the demand side of that equation with a long time like and in between now and then, of course, the supply side could very different. So I'm, I'm not really sure that central banks should respond to this, but they will. History tells you that they will, because it's just very difficult to, to defend that other approach when inflation is running too hot, even though it's due to a war, we need to respond to some extent. And especially the European Central Bank is already, you know, very trigger happy as a consequence. Speaker 2 Yes, and it seems to be trumping other other concerns like the job markets, etcetera, simply because it is it is very, very urgent for the administration also to get to get the prices under control. South Korea Exports vs ISM: The AI Boom Is Still Running Hot Essentially it is what kills governments. After all, inflation is OK. Andreas, let's fly out, fly over a few other of of our regular charts that are very interesting right now. South Korea, the classic Andreas, the the big 2026 chart, I know it's been used before, but we're using it a lot in 2026. Is this, we've, we've talked a lot about spreads here, PCICPI spreads and the tracks spread. Is this the biggest spread between the South Korean exports and and the ISM we've seen so far? Speaker 1 Yep, without a doubt. And you know, the question is obviously whether it is. It is of course an AI driven spread, right? But also, given what, what Trump just put out on, on truth 30 minutes ago around communities having to support data centres in the build out and all of that, because it will create jobs and you know, jobs for regular people and all of that. We're starting to see that, you know, I, I, I think it, it makes sense that there's a lag between the South Korean exports and the manufacturing economy here. Build the cyclical part of the economy. Because when you export chips, it's, it's not like you export them and then the day after they arrived in the US, you just pluck them into a data center, right, We're talking. Speaker 2 About a build out, but not quite, yeah. Speaker 1 Yeah, we're talking about a build out that's got faces in it of course. And there, there is to me no doubt also when you look at sub categories in, in the, in the job creation that there is a lot of jobs coming out of this AI build out also, you know, jobs that are not related to, to the chips, right? It it, we're talking about construction workers, electricians, you know, everything needed to, to construct things. And this is basically a construction economy by the end of the day. And when you have a strong construction economy, it's built over to the manufacturing economy overall, because a lot of local suppliers and all of that are of course, a part of that supply chain. So I am tempted to say that the ISM manufacturing out tomorrow will surprise two or three index points to the upside here given given what we've observed so far in our in outcasting and and from the regions publishing stuff. So the expectation. Speaker 2 To roll over a little bit, yeah. Speaker 1 Yeah, it's expected to print at 55.2. I think we'll get very close to 5858. Yes. So so that that's basically where our model puts it. So we'll we'll we'll have to see. But you know, at least we have a very clearly versus the consensus here. Speaker 2 That's enough to drive Marcus, isn't it? To drive a a true reaction. Speaker 1 Hopefully, but but hopefully but but you know, it could also be an excuse to hike interest rates since September. Jobs Report Preview: Why Weak Payrolls May Not Stop the Fed So, you know, it's kind of A2 sided sword, yeah. Speaker 2 Yeah, absolutely. But but I mean it's 58 wild dress. OK, any points on the the non farm payrolls coming up later this week and dress we have a big print week. We always love those. Speaker 1 So I'd like to say some of. Speaker 2 The same pandemic as theism? Yeah, go ahead. Speaker 1 Because remember exactly a month ago we had a print of I think was -23,000, right? And a lot of people have told me the Fed cannot hike with a negative payroll report ahead of it. I, I disagree with that because, you know, we're in a structurally different economy right now, given that the break even job creation on a monthly basis is, you know, between friends around 30,000 jobs for now. You know, we don't have that inflow of migrants anymore. So the economy simply doesn't create as many jobs from a supply side perspective, right. When you have a say, a base rate of 30 KA month, you know, just from a statistical standpoint, you'll print it below 0, say once a quarter, maybe once every four months. So it, we'd better get used to that. It, it's, it's a normal print now to see -20 K jobs, it's not something to worry about. It's just what it is. And therefore I, I, it, it, it was kind of solidified by, by Warsh's comments on Friday. He said, well, we don't really worry about the jobs mandate right now because, you know, unemployment is low, etcetera, right? So he, he, he's got his eyes on, on inflation. That seems to be the same conclusion that is shared by many of the members of the committee. So the key to unlocking the Fed here if if you're hoping for lower interest rates is to see lower inflation. It's not to see non farm payrolls below zero. I think the consensus is around 55 K on Friday. ECB vs Fed: Why the Short-Dollar Trade Still Works I'll I'll probably lean on the soft side of that, but not enough to really alter the trajectory of the Fed here. Speaker 2 OK. Andreas, any final remarks before we round over Andreas, we have an interest rate decision by the ECB, but you're usually less less, you're less hyped about that. Speaker 1 So, so OK, I'll say if I'll say this about it and you obviously need to read our research to get all of the details on how to trade it. But we've been banging the drum on this transatlantic inflation spread between the Eurozone and the US supporting a more aggressive European Central Bank here in September than the FIT policy path, right? I still think that is the case. So when we look at the September decision from the ECB versus the September decision by the Fed, it could very well be that we get a rate hike from both. But I think in terms of future expectations, as long as we have this products inflation in oil space, which remains the case and it's even more the case in Europe where we have the net gas issue on top. I think it is a good working assumption that the European Central Bank will out hawk the Fed And that kind of supports the notion that the euro versus the dollar goes up. We've been you know, incredibly right on that trade since early July, took a beating on Friday, but it's not like it's off that trade. And if I'm right that's got best and starts the printer on September 9th. We obviously get a treasury driven short, short legs the dollar trade as well. So I think that's the one to watch when you look at the ECB versus the Fed, including this Fed versus Treasury debacle that is ongoing that the short dollar trade, it took a beating on Friday, but it still looks good. And you know, he kind of he kind of handed all of those speculators currently lower the dollar case. The dollar case is very long. If you look at at market positioning across all measures, Bosh kind of handed those a life vest. But I think Scott Besson will try and drown them again. Pardon my French, but I I think that is exactly what's going to happen in in nine days from now. Speaker 2 Push and pull and rest. Yeah, OK guys, that's all we had for you this week from Macro Mondays. Please remember to like and subscribe on YouTube or in the podcast channel or wherever you are listening. We very much appreciate that it helps get our, our message sounds even wider and even more guys involved in our, in our stuff, which is always great. Please also leave a comment if you have ideas for shows or questions to, to, to pick up incoming shows. We're always welcoming those, even though there's usually lots of stuff to talk about each week, But we, we, we'll have to get those. So thanks to you, Andreas, for joining in. Thanks to everyone for watching. We'll be back next Monday. Speaker 3 You obviously enjoyed the episode because you're here with me at the end. But listen, don't forget to go to realvision.com/join and grab a free membership. It's an incredible community packed with alpha, great investment ideas, and the research that you need to help you unfuck your future. So get started now. Go to realvision.com/join.