Transcripts
Erik: Joining me now is freelancer.com founder and CEO, Matt Barrie, who's also becoming a world renowned expert on artificial intelligence. Matt just published a fantastic article, which I would consider to be a must read. It's called AI of the Storm, that's linked in your Research Roundup email. If you don't have a Research Round up email, you're not yet registered at macro voices.com Just go to our home page macrovoices.com, click the red button above Matt's picture, which says, looking for the downloads. Matt, why don't we start with the State of the Union, if you will. What has changed in the world of AI in the six months since we last had you on?
Matt: Well, it's been a dramatically changing landscape in the last six months. As it turns out, you can assemble a ragtag team with a relatively modest budget and even work on potentially AI as a side project and deliver a model which could, can challenge the state of the art of what was has been coming out of Silicon Valley. You're seeing this not just with independent, private companies launching models here, there, everywhere. But you're also seeing it with open-source efforts, and, in fact, starting a foundational AI model seems to be akin to opening yet another Thai restaurant, albeit potentially a very good Thai restaurant in Thailand, while at the same time handing out the recipe book and the business plans. You're seeing efforts come from left, right and center that you wouldn't expect. Elon Musk managed to assemble, did it the traditional way, and managed to assemble a very large data center with Grok 3 and get access to the hardware, and now has produced one of the leading models, really getting OpenAI run for its money in the US. But you're seeing efforts from all around the world tackling different parts of the problem, whether it's team in France called Mixtral, or now the clear and present threat is coming directly out of China, with the likes of DeepSeek, where, literally just out of nowhere, late last year, a team of 160 ragtag engineers on at a hedge fund, worked on a side project and dumped out a model, DeepSeek-V3 and then the second model, DeepSeek R1 which really challenged the state of the art of OpenAI's foundational models. And they managed to do so on a fraction of the budget. It's been rumored that the training that was involved for DeepSeek involved about 2000 GPUs, when it would normally take 20,000 GPUs, they achieved the 10 times efficiency in the training of these models through just some smart optimizations under the hood. A bit like taking a race car and doing some tinkering with the engine, they managed to speed up the training about 10 times. And as a result of that, the training budget is remembered to be around $5 or $6 million which blows up the water in comparison to some of the latest we've seen in the valley, where training models in the order of $100 million. So, you're seeing all these competitive threats come out of nowhere, and models are being released, really, at such a rate. I think just before we started the podcast today, you commented there was another DeepSeek model was just launched overnight, which people are trying to get their hands on and understand what that's about. But there's certainly competition coming from left, right and center. At the same time, these models are getting a lot more sophisticated, so they're now multi-modal. That means they can take in text, they can take in images, they can take and they can produce text and images, or take in PDFs and a range of different modalities, and output in different modalities directly. So, you don't have to really have a translation step in between them. And simultaneously with all of that, there's been a cataclysm in terms of the hardware layer, which we can talk about in a second, coming out of China as a result of US sanctions.
Erik: Joining me now is Lyn Alden, founder of Lyn Alden Investment Strategy. Lyn, it's great to get you back on the show. It's been too long. Let's get into what's on everybody's mind right now, which is, wow, big correction on the S&P, markets generally, as we've seen, what is at least a relief rally, a bounce up to almost the 200-day moving average. The rally stopped right at the volume weighted moving average, or volume weighted average price, as some people call it. We've seen, as we're recording here on Tuesday afternoon, Tuesday was a little bit of a down day. Does that mean the selling is about to resume, and we haven't seen the bottom yet? Are we just stumbling here? What do you think is happening? What's driving this? What's the big picture behind it?
Lyn: Well, thank you for having me back. Always happy to be here. And when I kind of focus on what I think, expectations around the equity market, I focus more on, do I think it's going to have a decent year or a bad year, or even a decent two to three years, or not a very good two to three years. I try not to draw the line on individual levels. I leave that to the professional traders, because that's a hard enough profession, even for those that focus 100% on it. And so, it's nice that there's like, a little bit of a near term bottom here, and we kind of put the end to lower highs. I don't have a conviction of what happens in the next few weeks, I've been making the case we've entered more of a headline driven market. So, the past couple years were more of a mechanical, liquidity driven market, where things tended to trend until they didn't. Whereas the headline driven market, quite big turnarounds can happen pretty quickly. So, I think that, if kind of the current period of policy uncertainty continues, if we don't get more visibility on tariffs, yes or no, and retaliatory tariffs, yes or no, and some of the questions around DOGE and fiscal, then it's certainly possible that this could bleed lower. But I generally have a view that large cap US indices are just not super attractive here on a risk-reward basis. So, I expect chop in general, that could be chopping to slightly lower lows. It could be being range bound for a period of time. Don't really have conviction, but I do find other areas to be more investable and more interesting at the current time.
Erik: Joining me now is Variant Perception CEO, Tian Yang. As many of you already know, Variant Perception is well known for their excellent graphs and charts, so you're definitely not going to want to miss the slide deck that accompanies this week's interview. Registered users will find the download link in your Research Roundup email. If you don't have a Research Roundup email, it means you're not yet registered at macrovoices.com. Just go to our home page, macrovoices.com, click the red button above Tian’s picture that says, looking for the downloads. Tian, it's great to get you back on the show. It's been quite a while. Let's start with the big picture before we dive into the slide deck. Obviously, I think the biggest issue in macro right now is President Trump, whether you love him or whether you hate him, nobody can argue that he's got unorthodox policy approaches, and clearly, he's taking some very bold policy moves. I suppose I could argue that that means LEIs are more important than ever, because they tell us when a new trend, perhaps as a result of the changing administration is upon us, or you could argue the other side of that, which is if LEIs depend on long data series, obviously when everything has changed, maybe that invalidates part of it. How should we think about LEIs in an environment when there's been such a profound change in in the political regime?
Tian: Well, hi Erik, glad to be back. And certainly, I think that's a great question. In a way, it's kind of simultaneously true, right? You have this duality, where, on the one hand, I think we do really need to make sure we have an anchor using lead indicators of growth, inflation, policy regimes of liquidity, just to ensure we have a base case. But at the same time, clearly, we have to appreciate which of the data points that are actually capturing what's going on and which of the data points can't react to the headlines and the news, the tariffs and so forth. So, I think it's a bit of both. I mean, the way we're approaching is to realize that clearly, even things like tariff and sentiment, they can clearly affect survey data, a lot of these implicit kind of sentiment things are going to be where it shows up first in the data. But I think this year, you do kind of need to have, quote, unquote, like a view, especially on kind of the bigger political trends and picture, and then use that to contextualize where leading indicators are. So, I think overall for us, it's kind of like when we, you know, the kind of most overarching model we have which kind of combines growth, inflation policy and liquidity is still being pretty balanced in terms of macro risk, right? So, it does see like a mix of upside downside risk. So, in general, it's still been somewhat more benchmark allocation, but we're kind of overlaying that a little bit with essentially two longer term frameworks we have, where we think that this Trump administration is one, a repeat of kind of the Reagan playbook, in particular, using trade policy to encourage reshoring, encourage manufacturing to come back to the US. You know, very much analogous to Reagan, getting the Japanese to come build car factories in the US in the 80s. And ultimately, obviously, a lot of these policies leading to an end point that's kind of Plaza Accord. And obviously, there's a lot of talk about Mar-a-Lago accord right now as well. So, you kind of have this one overlay over the top that clearly is a pretty big shift. I think we even rolled out, put a note out, talking about tariffs will continue until morale improves. That's kind of the overlay over the top of that. So essentially, it's kind of base case, very neutral, but have a slightly more stagflationary tilt over the top.
And then the second big, kind of strategic overlay, or difference is that, to us, it looks like Monroe. The Monroe Doctrine is very much back in terms of the geopolitics and the US direction. So, our understanding of that is essentially more localized spheres of influence, and kind of like a more of a splitting of the areas of influence globally. So again, this is kind of America for the Americas, where, from Panama to Canada to Greenland. It’s like, this is the US is local sphere of influence, so the US needs to dominate that. And every other country needs to just stay out of the way. But equally, in return, Asia is kind of China's dominant sphere of influence. So, it looks like this administration cares a little bit less on exactly what happens in Taiwan. So China gets to dominate that probably a little bit more, but in return, China needs to lay off. So that's kind of two bigger, currently, kind of two bigger overlays we're putting it over the top elite indicators and kind of tying that together to come up with investment themes.
Erik: Joining me now is Michael Every, global strategist on economics and markets for Robobank. Michael, you're back kind of early. We don't normally have someone back just six weeks after your first appearance on MacroVoices, where you were super popular. We had another guest booked this week who had to back out, when we went to look for a backup guest, I just thought, wow, as much as it's only been six weeks, your comment, when you were on before, saying, take President Trump very seriously, but not always literally, proved to be so prescient, it just seemed like such a fit this week. Michael, what the heck just happened in the Oval Office? What's the real agenda? What's going on here? How do we make sense of this news flow around Zelensky and Trump and the falling out and now Europe is befriending Zelensky, and where is this all headed? What does it mean? How do we sort it out?
Michael: Great question. Good to be back, and I have to say, let's be honest, that six weeks feels like six months or six years in terms of the news flow that we've seen and the sheer exhaustion that I think we're all feeling. So, there's a lot to unpack there. Should we start with Zelensky?
Erik: Let's do it.
Michael: Okay. So, I mean, there are so many different ways that you can look at that, and there are such passionate opinions of it from different sides. Clearly, what we saw on that fateful Friday in the White House was a diplomatic failure of historic proportions at the very, very highest level. That's not how diplomacy is supposed to be done in public. I can assure you, that's how a lot of diplomacy is done when the cameras are turned off, but that should never have been done like that. And you can blame Trump, some people have, you can blame Zelensky, and I personally think far more of it since when Zelensky, he didn't realize where he was and the audience he had, and he was using a lot of the same rhetorical tricks that go down well in Europe and do not work in America. But the long and the short of it is that trust was already not there and it blew up. But I think the greater likelihood is, and the way things are moving, by the time people are listening to this, it could already be true that whilst you've seen today, in Asia time, America now pause all military aid to Ukraine. To add extra pressure on top, there really aren't many good options for Ukraine other than signing that minerals deal, which is what blew everything up on Friday, and then proceeding to try and flesh out what does or doesn't constitute some kind of security guarantee of sorts afterwards, because it's not going to happen the other way around. Europe isn't really in a position practically to do it. America has said it won't do it. No one else will. And so, it's really that or nothing. So, I expect we will return to that. And I think Zelensky, you know, much humbled, even if he doesn't do it in person, will end up signing.
Erik: Joining me now is Mr. Eurodollar himself and Eurodollar.University founder Jeff Snider. Jeff prepared a slide deck to accompany this week's interview. You'll find the download link linked in your Research Roundup email. If you don't have a Research Roundup email, just go to our homepage. Macrovoices.com, look for the red button above Jeff's picture that says, looking for the downloads.
Jeff, it's great to get you back on the show. What I want to focus on today is everybody, who's anybody is now talking about the Mar-a-Lago Accords, the basic idea being President Trump doesn't want to continue the United States not being compensated for providing security services to most of the Western world. What's on the table for discussion is the idea that maybe instead of paying interest on our national debt, we would instead, at least to sovereign holders of treasury bonds, we'd provide military protection in lieu of interest payments. That's a radical, just fundamental change in monetary policy. So before we even dive into the details, and I know you've got a fantastic slide deck prepared for us with lots of details, let's start at the highest level of, you know, normally, the whole market freaks out if you get a 50 basis point instead of a 25 basis point change to policy rates, we're not talking about a little change in policy rates. We're talking about a proposed change of the overall monetary framework of the entire Western world. When's the last time anybody changed anything of this magnitude? Is it a good idea? And what are they trying to accomplish?
Jeff: Oh, there's so much there, Erik. I mean, I think you're exactly right in characterizing it that way. This is, like you said, this is not a 25 basis point rate reduction or a rate hike by the Federal Reserve. And in many ways, just to start out, I think this is fine. This is a sign of progress, because people are finally talking about, hey, we need to do something radical. And let's be honest here, this is a radical proposal. A lot of caveats here. We don't know exactly what's been talked about. We don't even know how serious that anyone's taking it, but it does seem to be something that is on the table for discussion at hand, from the rumors and everything has been circulating. It seems like there has been some discussions about it. So, this is something that's radical and something that is sorely needed. We've needed to replace the monetary system for what, ever since August of 2007, so we're going on 18 years now, and up until recently, nobody's bothered even mentioning it. So, the fact that they're at least thinking about, and I think one of the big positives here is the fact that they're connecting some dots and finally starting to understand that something big needs to be done. Because it's not just like everything's going to magically heal itself, or if the Fed comes out with a seventh version of QE, that'll somehow be the correct amount of QE. At some point, what needs to be done is something radical. So, I think that is absolutely the right way to think about it. And so the question isn't really that so much as, is what they're proposing likely to succeed, and more importantly, can they pull it off? I think those are the bigger questions. And in that way, there's still a lot of ground left to be covered, let's put it that way, it's sort of an introduction. So, like you said, I have a slide deck here. Some of the positives are that, look, first of all, the Trump administration and those surrounding the president have finally realized that the dollar going up in exchange value is not a good thing. So, most of what's been proposed on the Mar-a-Lago accord, or that's what everybody's calling it. And I'm a little disappointed, because I'm right down the road from Mar-a-Lago. I'm just down south Lago, I'm just down southern Boulevard, and nobody called me and asked me to participate.
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