3 Banger Trades For June w/ Andreas Steno & Mikkel Rosenvold | Macro Mondays

Key Concepts

• Nowcasting: A method of predicting current economic conditions using real-time data rather than waiting for lagging official reports.
• Bottleneck Trades: Investments in sectors that are essential for the growth of AI and infrastructure (e.g., electricity, hardware, server manufacturing).
• TGA (Treasury General Account): The U.S. government’s operating account at the Federal Reserve; its drawdown injects liquidity into the private banking system.
• SOFR (Secured Overnight Financing Rate): A benchmark interest rate for dollar-denominated derivatives and loans; its spread against the Effective Fed Funds Rate indicates dollar liquidity.
• Short Squeeze: A rapid increase in the price of a stock that occurs when short sellers are forced to buy shares to cover their positions.
• AI-Driven Momentum: The phenomenon where AI models (like Claude) influence retail investment behavior, creating self-reinforcing momentum in specific stocks.

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1. Macroeconomic Outlook and ISM Data

The U.S. economy is showing signs of acceleration, particularly in the manufacturing sector, which aligns with the hosts' "nowcasting" models.

• ISM Manufacturing Index: The latest numbers were surprisingly strong, indicating growth faster than pre-war levels. This is attributed to the massive AI infrastructure buildout, which is hardware-intensive and requires significant on-ground capital expenditure (capex).
• Inflation: Inflation momentum appears to be flatlining since early May, a positive surprise given the ongoing geopolitical tensions.

2. Geopolitical Risk: The Iran-U.S. Situation

The conflict remains a "fragile" variable. While Iran has reportedly broken off communication channels (WhatsApp negotiations), the market reaction has been relatively benign.

• Market Impact: Oil prices spiked slightly, but equity markets remain largely flat, suggesting investors are currently pricing in the conflict as contained.
• Strategic Window: The hosts argue that Israel is currently operating within a "window of opportunity" to conduct military actions before a potential U.S.-Iran ceasefire is finalized, as a formal peace deal would likely restrict Israel’s ability to strike.
• Thresholds: The hosts estimate there are roughly 6–7 weeks of reserves left. A resolution or a prolonged ceasefire involving the reopening of the Strait of Hormuz is considered essential for the global economic upswing to continue through the summer.

3. The Role of AI in Robotics

The discussion highlighted the gap between the potential of humanoid robotics and current technological capabilities.

• Data Bottleneck: For AI to function in real-world tasks (like home cleaning), it requires millions of hours of recorded human labor.
• Shift Case Study: The company "Shift" is using a crowdsourced model to pay people to record their chores, creating a training dataset for future robots.
• Investment Strategy: Because humanoid robotics are likely 5–7 years away from mass adoption, the hosts have shifted their robotics portfolio toward autonomous miles (e.g., Tesla, Waymo), where the training data already exists in abundance.

4. Liquidity and Market Dynamics

• Treasury Issuance: The U.S. Treasury is underestimating its issuance needs due to lower-than-expected tariff revenue (following legal rulings against the administration's tariff policies). This creates a "nasty hole" in the budget, forcing a drawdown of the TGA.
• Liquidity Injection: This drawdown will inject liquidity into private banks, likely fueling further leverage in the market.
• Leverage Gauge: The spread between SOFR and the Effective Fed Funds Rate is currently negative, signaling an abundance of dollars and a high capacity for banks to provide leverage for trades.

5. Trade Ideas for June

The hosts identified three primary areas of interest for the month of June:

1. Security Software: A sector currently experiencing a violent short squeeze. The hosts remain heavily allocated here.
2. Computer Server Makers: Companies like Dell and HP Enterprise are benefiting from the AI buildout. Dell’s performance is described as "peak memecoin" behavior due to its rapid, unexpected surge.
3. Military Drones: A potential "confirmation case" exists if government funding packages are officially confirmed, which could trigger a momentum spike similar to what was seen in quantum computing stocks.

6. Notable Quotes

• “Macro is basically the driver... and it will be everything in that show on Wednesday.” — Andreas Deno, emphasizing the primacy of macro trends over individual stock narratives.
• “Today’s home cleaned today lays the groundwork for a home that cleans itself tomorrow.” — Quoted from the Shift promotional video, illustrating the data-collection model for AI.
• “It would be odd if Bitcoin was the only risk asset that wouldn't enjoy its moment in the sun during this cycle.” — Andreas Deno, on the current lack of participation by crypto in the broader liquidity-driven rally.

Synthesis and Conclusion

The market is currently in a liquidity-driven rally supported by strong manufacturing data and an AI-led capex cycle. While geopolitical risks in the Middle East persist, the market has shown resilience. Investors are advised to monitor the TGA drawdown and the "momentum factor" driven by AI-generated investment recommendations. The primary actionable insights for June involve focusing on software security, server hardware, and potential momentum plays in the drone sector, while remaining cautious of the long-term timelines required for consumer-facing robotics and crypto.