Ep. 369: Marvin Barth on US Re-Industrialisation, Trump 2.0, and the Localisation Thesis

**Bilal Hafeez** (0:03)
Welcome to the Macro Hive Conversations Podcast. I'm Bilal Hafeez, Head of Strategy at Macro Hive. Before we dive in, a quick update. Following Macro Hive's acquisition by the BGC Group, BGC has launched a new regulated business called Macro Hive Markets. For the first time, onboarded clients can also access execution services via Macro Hive Markets. This new workflow will allow macro institutional investors to benefit from strategy and insights, alongside access to global liquidity. Please contact Andrew Simon or Gail Motibrian on Bloomberg, or click the link in the description below for more details on Macro Hive Markets and its service offering.
Now on to this episode's guest, Marvin Barth. Marvin is the creator of Thematic Markets and Seriously Marvin. Thematic Markets is rigorous institutional quality research aimed at Macro professionals, while Seriously Marvin presents more accessible takes on contrarian musings. Marvin doesn't have time to research at Thematic Markets. Both publications benefit from the uniquely broad perspective on the global political economy Marvin has gained from a three decade career spanning nearly every asset class, academia, central banking, finance ministry and international institutions. These include working at Barclays Investment Bank, Citi, the Federal Reserve Board, the US. Treasury Department and the Bank for International Settlements. Now on to our conversation. Greetings and welcome Marvin. It's always fantastic to have you on the podcast show.

**Marvin Barth** (1:23)
Well, thank you, Bilal. It's a pleasure to be back. I really enjoyed my last time here on Macro Hive, and I'm looking forward to our conversation today.

**Bilal Hafeez** (1:32)
Marvin, one of the reasons I like having you on is you're willing to have bold views. You like to go against the grain of market narratives and just establishment narratives, and your sub stack, which I subscribe to, is a great resource to hear your views.

**Marvin Barth** (1:45)
Thank you for that. I appreciate that.

**Bilal Hafeez** (1:47)
Yeah. Okay, let's kind of get into it. So, you know, one of the stories for the US this year has been, you know, I guess not just for this year, but last year as well, the resilience of the US economy, you know, has been one sort of recurring topic I've had with many of my guests as well. You know, we had the tariffs, US bounced back. Then we've had the Iran war. US has kind of been relatively immune from that all. And then also at the same time, you know, where people do talk about US growth, they talk about a very narrow strand of growth, which is data centers and that's all. How do you respond to that framing?

**Marvin Barth** (2:17)
Well, I think, you know, one of the things that I have, I think, gotten right over the last, you know, frankly, going back almost a decade, is much stronger US growth than people expected. And part of that was that I saw this as a much broader based reinvestment that was grounded in fundamentals, but being augmented by policy and by events, right? So I think we talked about it last time, you know, I have this localization thesis that really what's changed in the world, and it starts around 2010, 2012, or at least that's the tipping point when you start to really see it show through in the data, is that it becomes cheaper and an increasing array of goods and services to produce things locally using automation than it is to use the cheapest labor anywhere in the world throughout sourcing. And as a result, it actually becomes much more efficient to start investing again in economies that are the wealthiest economies, and the US has been at the forefront of that. And this investment boom that people are talking about actually begins in 2012, which right there is a big clue. This is not just AI. This is much, much broader than AI, right? And so that's one of the reasons why I think people have continuously underestimated is they haven't observed or haven't been focused on that. And then, of course, you get tariffs, you get COVID, you get national security issues, all of these things basically reinforce that localization premium. And I think this is why I had such a different view to people last year on the tariffs. It's that all tariffs did, in my mind, was if you were sitting on the fence as a corporate executive thinking, hey, I see all this going around me where some of my competitors are starting to automate their production locally and things like that, this is a big expense. I'm not sure I really want to go through that one. I've invested so much in an outsourced supply chain. And all of a sudden, you see this big tariff wall go up. What is your decision going to be? It's not exactly what every other economist said, that this is somehow a negative productivity shot. No, it's the exact opposite. It's the starting gun to build as much as you can as fast as you can. And of course, it's been no surprise to me that investment has been through the roof since then, right? Like, you know, you've been seeing it surging across categories. And I think that gets to another problem that the consensus has faced here, is that because they've been so focused on the AI story, which I'm not going to deny is a big one, it's important.