Deutsche Bank's Ozan Tarman and Aditya Singhal on Understanding the Macro Risks

SPEAKER_2 (0:02)

Bloomberg Audio Studios, podcasts, radio, news.

Tracy Alloway (0:18)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:22)

And I'm Joe Weisenthal.

Tracy Alloway (0:24)

Joe, our live show in London recorded May 7th at Wilton's Music Hall. A lot has happened since then in markets. It's hard to have a markets conversation that isn't out of date within a minute or two.

SPEAKER_2 (0:37)

Yeah, I know.

Tracy Alloway (0:38)

But I think this one carries on. I think this one is still relevant.

Joe Weisenthal (0:42)

Well, I have to say, I always feel a little anxious about recording markets episodes because of this very phenomenon, but this is true for our live and our recorded shows that by the time it comes out, who knows how much will have changed.

Tracy Alloway (0:53)

This is why you should go to the live show.

Joe Weisenthal (0:54)

This is why you should go. That's exactly where I was going to go. It's actually good to record markets episodes of the live show because that's like, all right, you create an inducement to get people to buy a ticket. But again, with a lot of these things like how traders are digesting this particular moment in time, sure, the headlines and the prices on the screen change, but there are certain principles and frameworks for understanding what's going on that will be useful regardless of what's happening in the meantime.

Tracy Alloway (1:18)

You mentioned frameworks and that is the perfect framing for this discussion. So we indeed had the perfect guests. We spoke to someone who's been on quite a few times before, one of our favorites for letting us know what the big money is actually thinking about in trading. We spoke with Ozan Tarman. He is, of course, Vice Chair of Global Macro over at Deutsche Bank. We also spoke to his colleague, someone who hasn't been on the show before, but who has quite a reputation, one of Deutsche Bank's star bond traders, Aditya Singhal. He is the head of EM trading across RatesFX and Credit at Deutsche Bank.

Take a listen.

Okay, let's start with the obvious question. Lines on the chart keep going up despite what would seem to be some challenges to the global economy, to put it mildly, why?

Ozan Tarman (2:05)

First of all, even when I walked in, I was checking for you guys. It wasn't like that 15 minutes ago when-

Joe Weisenthal (2:11)

We're now recording this at 7.33.

Ozan Tarman (2:13)

Exactly, 20 seconds. When one agency claimed that the operation freedom was back on, that President Trump could try to open the hormones by force, SMP and oil, SMP didn't like that at all. Oil was surging higher than Algeria denied. So we're all calmer again. But bottom line is why we keep going higher despite everything that Javier and Lorcan said is because buses are empty. When I say buses are empty, I don't only talk to my portfolio managers, but men on the street, to my college classmates, one of them was like, what do you mean buses are empty? That means investors don't have it. The analogy is a bit like closer to April 2nd, April 9th of last year when we had the big tariff shock, billboard up. We thought that it would be the end of the year, end of the markets. Then President Trump stepped back and markets never looked back. A bit similar coincidence or not, March 31st is the first time he claimed through Wall Street Journal that he would separate the state of Hormuz and the operation, that the two could go separately. None of that happened, but that was the first big breath market took. And on April 9th, exactly on the same day, the big first postponement came. He said, we're not going to do anything for two weeks.

And since then, markets never looked back.

A historic, led by tech, NASDAQ and S&P rally. And you know, I talked to a lot of people, a lot of key ladies, guys. Honestly, maybe three, four, five people really believed in this rally since April 1st, April 9th. That's one big part of it. But it can't be all positioning. Also fundamentals, right? Earnings.

Again, head of sales. One of my legendary researchers, Jim Reed, just today, he was on Bloomberg as well, talking about earnings. In Q4 of last year, just 13% growth. Q1 record is biggest in five years, led by tech 24%.

That engine keeps us going.

Joe Weisenthal (4:16)

Yeah, the earnings are what they are. Here's something I'm curious. Ozan came in and he gave us the latest headlines. Thank you, because I hadn't been looking at that.