Andreas Steno Larsen 5.2 14 ideas

Steno argues that Kevin Warsh wants to shrink the Fed balance sheet, but cannot do so without causing a liquidity crisis in the repo market (as seen in Q4). The only way to shrink the Fed balance sheet safely is to allow private banks to take on more leverage. This requires rolling back post-2008 regulations, specifically the Supplementary Leverage Ratio (SLR). Steno predicts this easing will free up "trillions" in capacity. A rollback of leverage constraints allows banks to expand their balance sheets and profitability, creating a massive tailwind for the financial sector. If the administration fails to pass regulatory easing, the Fed cannot shrink its balance sheet without breaking the repo market.

Steno notes that the upcoming relaxation of bank leverage rules (SLR) will allow for "indefinite leverage" similar to the 2004-2007 era. Increased bank leverage results in a flood of cheap funding and liquidity entering the system. Steno explicitly states this will result in "cheaper funding for your crypto bags." Crypto is a direct beneficiary of increased systemic liquidity and cheaper cost of capital. Regulatory delays or a sudden pivot back to hawkish monetary policy to combat inflation.

Steno is "fully out" of Silver but holds Gold (specifically Barrick), Copper miners, and Rare Earth metals. While the metals trade is strong due to geopolitics, Silver has become a speculative mania (illiquid relative to trading volume). Gold and Copper offer the same thematic exposure but with significantly deeper liquidity and lower volatility-adjusted risk. Long the miners and underlying metals as a safer way to play the commodities supercycle. A strengthening US Dollar or a deflationary bust could hurt commodity prices.

Steno sold his entire Silver position two weeks prior. He notes that on a single Friday, the SLV ETF turnover was $40 billion (40% of annual mining supply), signaling extreme speculation. When paper trading volume dwarfs physical supply to this degree, it indicates a "blowoff top" or extreme fragility. Steno advises staying out despite the temptation to chase. The risk/reward in Silver is poor compared to Gold/Copper due to extreme volatility and speculative frothing. Silver could continue to melt up irrationally in a "meme stock" fashion before crashing.

AI hyperscalers are announcing massive numbers, but the physical power grid is a major bottleneck. Connecting data centers to the grid takes too long. Bloom Energy (BE) provides decentralized fuel cells (running on biogas/nat gas) that allow data centers to bypass grid connection delays. LONG as a solution to the "AI Power Bottleneck." Volatility in natural gas prices or competition from other decentralized power sources.

Despite the Trump administration's aversion to green energy, Andreas notes that ~50% of the US population still wants solar solutions (the "middle finger to Trump" trade). Enphase (ENPH) provides decentralized battery/solar solutions for households. Nextracker (NXT) (referred to as "Next Power" in the video but described as the tracker/software optimizing yield as the sun moves) is an "anti-China" solar trade because its supply chain is less dependent on China. LONG on decentralized solar infrastructure that works independent of federal subsidies. Punitive tariffs or complete removal of tax credits by the new administration.

Andreas states that the West has officially decoupled from China regarding critical minerals and the US administration plans to implement price floors for rare earths. Building a Western supply chain for rare earths is impossible without price floors due to profitability issues. Energy Fuels (UUUU) is unique because it is both a Uranium player (energy security) and a Rare Earths processor (strategic decoupling), solving two geopolitical problems at once. LONG as a top pick for the domestic US Capex and supply chain onshoring cycle. Failure of the US administration to implement promised price floors or delays in processing capabilities.

Central banks are buying hard assets to protect reserves from seizure. Andreas sold his Silver (SLV) due to extreme volatility but remains invested in Gold and Copper miners. Silver is too small and speculative (ETF turnover was 40% of yearly mining supply in one day). Gold (Barrick - GOLD) and Copper (COPX) offer much deeper liquidity and better volatility-adjusted returns for the "hard asset" trade. LONG the miners as a safer, leveraged play on the underlying commodity bull market. A strengthening US Dollar or a deflationary bust crashing commodity prices.

Private Credit firms have allocated roughly 25% of buyout deal value to the Software sector over the last few years. If the "Death of SaaS" thesis plays out and AI commoditizes software, Private Credit firms like Apollo (APO) are the ones "holding the bags" on these massive leveraged buyouts. Andreas notes Apollo and Bitcoin have become the "same trade" due to correlation. AVOID or WATCH closely as a proxy for software sector credit risk. The SaaS sector proves resilient, or the Fed eases regulations (ESLR) allowing banks/private credit to lever up further, bailing out bad loans.