Macro bar talks

Good morning everyone, and welcome back at this new edition of this new publication (totally free for everyone) talking about macro assets.

It’s been a heavy month for the tape. Between US courts playing ping-pong with trade policy, a massive shift in the AI hierarchy, and central banks realizing the "last mile" of inflation is more like a marathon, there’s a lot to digest.

Let’s break it down them.

1. The Tariff Pivot: Section 232 is the New Black

After the US courts clipped the wings of the IEEPA (the broad emergency act), the administration didn’t retreat—they reloaded. We’ve seen a swift pivot toward Section 232 (National Security) and Section 301 to push through those new tariffs.

2. AI Wars: Claude 4 and the "Citrini" Reality Check

The tech narrative just got a massive software update. The launch of Claude 4—with its "Claude Code" and agentic capabilities—has sent shockwaves through the market, proving that OpenAI no longer has a monopoly on the "frontier."

The "Citrini" Perspective: The real conversation in the pits revolves around the growing realization that "Compute is a Commodity." As Citrini and other macro-tech analysts have noted, the "Brute Force" era of AI—just throwing more GPUs at the problem—is hitting diminishing returns.

The Disruption: The launch of specialized tools like Claude Code Security triggered a mini-flash crash in cybersecurity and SaaS stocks (CrowdStrike, Cloudflare) as investors realized that LLMs are moving from "chatbots" to "automated competitors."

The Deep Rotation: We are witnessing a brutal transition from "Pay-per-Seat" SaaS models to "Result-based" AI agents, effectively killing the valuation multiples of legacy software companies that can't pivot fast enough.

3. Macro Reality: The "No Landing" Trap

The data for the last month has been stubbornly strong.

Labor & Spend: US Payrolls and Retail Sales came in hot enough to make "recession" look like a fairy tale.

4. Central Bank Divergence:

The Fed: Powell is in "wait and see" mode. With tariffs looming and growth steady, there is zero incentive to cut aggressively. The market is now pricing in a "Hawkish Skip."

The ECB: Europe is looking tired. Lagarde is staring at a stagnant German industrial base. The ECB is almost forced to cut just to keep the lights on.

Risky assets saw a rotation both geographically (with Europe, Emerging Market and some asian equity market as Korea and Taiwan near or above ATH and outperforming USA) and sectorial (with capital intensive and real assets outperformimg technological name). While fundamentals are resilient, techicnals are less supportive (with weak breadth and high buyer of put protection creating negative gamma). So It make sense to have a positive bias on risky assets, but respecting price action it's better to have a light positioning and waiting a better entry.

Rates are near the bottom of their ranges, with 10y UST near 4% despite hawkish Fed (FED sentiment natural language higher) following more Vix than macro. So in the short term bonds are working again as a hedge. At these level I prefer to be neutral on duration (or trade tactically short treasury). At the same time I am short the body in a 2s5s10s fly on German curve. I continue to love also the 10s30s steepening there. Spread are tight but It make sense to fade any widening there, in credit or EGB spreads.

I trade I entered today is again a long breakeven in USA where inflation is sticker than in Europe. 10y breakeven in slightly above 2% and totally not looking at geopolitical risks due to Iran.

It's all for today. Have a good evening!