Laurent Lequeu: Massive Re-Rating of Commodities Coming for the World

Tom Bodrovics welcomes a new guest Laurent Lequeu to the show. Laurent is an indpendent financial consultant and publisher of the Macro Butler Substack. Togther they delve into macroeconomic themes for the year ahead, focusing primarily on the business cycle and its impact on the US economy. The U.S., currently experiencing an inflationary boom due to low interest rates and increased government spending, is expected to face changes with the incoming presidency of Trump, particularly in terms of tariffs which could shift the economy from a boom phase to possibly an inflationary bust.

Using ratios such as S&P to oil, gold to treasuries, and S&P to gold, they evaluate the current economic status in the U.S. and globally. However, potential tariffs could lead to higher costs for U.S. corporations and lower consumer confidence, impacting equity markets and the overall economy.

Despite being in a potentially stagflationary environment by 2022, the US may face an inflationary bust in 2025, with economic trends like unemployment, manufacturing, and inflationary numbers having global implications. Geopolitical events such as U.S.-Russia relations, tensions in the Middle East, and potential war in Asia could also surprise many.

Laurent suggests investing in equities and gold with a significant portion allocated to physical gold during uncertain economic conditions, while managing cash through short-term investment-grade US dollars bonds. He predicts higher treasury yields this year and suggested looking at commodities' performance relative to gold for potential re-ratings.

Laurent expresses doubts about Bitcoin's utility for preserving wealth and encouraged risk management and minimizing drawdowns for investors in the coming years. They also touch upon China's economic situation, the U.S. remaining the strongest major economy due to energy independence and relative political stability. He suggests investing in sectors like oil and gas, aerospace and defense, and perhaps Canadian gold miners should the regulatory environment improve.

Time Stamp References:
0:00 - Introduction
0:39 - Different Perspective
2:28 - U.S. Business Cycle
5:30 - Tariff Proposals
7:22 - Stagflation & Trends
10:28 - Conflicts & Risks
14:33 - Powell & Trump
18:34 - Fed & Liquidity
19:40 - Global Econ. Outlook
22:44 - Which Assets When
24:52 - Gold Equities?
29:00 - Gold & Currencies
31:44 - Golden Ratios?
33:30 - Uranium & Energy?
36:56 - Bitcoin/Gold Ratio
40:16 - Wrap Up

Talking Points From This Episode
- US economy facing potential shift from boom to bust due to Trump's tariffs.
- Investing in equities, gold, and short-term bonds during uncertain economic times.
- US to face stagflationary environment by 2022, possible inflationary burst in 2025.

Guest Links:
Substack: https://themacrobutler.substack.com/
X: https://x.com/TheMacroButler

Laurent Lequeu, an independent financial consultant based in Singapore, specializes in managing wealth for High-Net-Worth Individuals. With a career spanning West and East, Laurent analyzes the world through the lens of the business cycle and its impact on asset class performance in a multi polar world. He also shares his insights through The Macro Butler, a global macro newsletter launched in January 2024.