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

What It Covers

Deutsche Bank's Ozan Tarman and Aditya Singhal, recorded live in London on May 7, explain why equity markets keep rising despite geopolitical stress, how traders filter headline noise, and why the West-China manufacturing and AI competition defines the macro framework for the next two to three years.

Key Questions Answered

• •Positioning as a market driver: Equity markets continue rising partly because institutional and retail investors remain underinvested — "buses are empty" in Tarman's framing. The April 9 tariff postponement triggered a historic NASDAQ and S&P rally that almost nobody positioned for, with Q1 2025 earnings growth hitting a five-year record led by tech at 24% growth.
• •Headline trading is structurally impossible: Traders cannot react profitably to individual headlines — two conflicting Iran-related headlines moved markets in opposite directions within minutes during the recording. The practical approach is to identify a structural thesis, find the asset class offering maximum convexity to that thesis, then hold through noise rather than attempting to trade each news event.
• •West-China decoupling as the defining macro theme: China and aligned countries control roughly 55% of global manufacturing capacity, reaching 90-95% in specific materials like cobalt refining. If decoupling accelerates, the West must rebuild entire manufacturing stacks from scratch — driving multi-year CapEx cycles in energy, copper, steel, and critical minerals regardless of short-term trade negotiations.
• •Chinese AI competition is underpriced by markets: Huawei has developed chips comparable to Nvidia H100 processors, and China is advancing in optical computing, quantum computing, and distributed AI models. The current Western AI rally assumes a dominant position that may not hold. Traders should monitor Chinese model adoption rates and robotics development as a potential catalyst for repricing AI-linked equities.
• •Japan's Bank of Japan acts as a volatility suppressor: When dollar-yen approached 160 and US rates threatened to sell off simultaneously in early May 2025, the Bank of Japan intervened directly — strengthening the yen, pulling US rates lower, and stabilizing equities. This risk-parity mechanism functions as a structural floor, with central banks actively competing against fast-money volatility seekers.