Weekly Update: Returns by Cutting Through the Trump Noise!
Dear all,
We continue to navigate incredibly volatile macro markets driven by two key factors: Trump’s flip-flopping on tariffs and the recent AI/semiconductor developments related to the new DeepSeek LLM from China.
On tariffs, we view a 10% universal import tariff as the overwhelming base case. This has already contributed to weaker performance in European and Chinese equities around the election, as well as the main driver of the strong USD during the same period. As a result, we are less concerned that Trump will implement tariffs beyond expectations. We believe the embedded “risk premia” in the USD versus its peers is too high and have accordingly begun to bet against the USD.
Regarding the DeepSeek/AI story, we see it as a worrying development for NVIDIA and other semiconductor manufacturers. The order book for 2025 would need to double compared to 2024 to meet expectations—a questionable assumption given the incredible efficiency gains in compute/GPU power demonstrated by the DeepSeek model. Consequently, we maintain our view that Nasdaq remains overpriced relative to peers and have continued to capitalize on this stance this week.
Our nowcasts indicate a relatively uniform growth pickup across Europe, China, the US, and other regions, along with early signs of fading inflation momentum. This supports the case for a weaker USD and similar trends. We are up 1.6% through January, delivering the kind of steady returns we aim for across diverse macro environments.
Best regards,
Andreas Steno
Chief Investment Officer,
Asgard-Steno Global Macro
Macro chart of the week: The US economy is improving a lot in surveys
Performance chart of the week: Return of ASGM versus other asset classes
Allocation as of the 24th of January
Performance estimate