In our interview with @DannyDayan5, he broke down his new financial conditions model that’s challenging consensus. The Fed thinks it’s restrictive, but growth & inflation say otherwise. Why Danny thinks the next inflation wave may be heating up ↓

Growth is rebounding, but inflation is coming with it. ➤ Q1 GDP looked weak, but stripping out noise, it was 5.8% nominal ➤ Financial conditions have eased since April despite the Fed holding steady ➤ PMI data suggests strong services and pricing power The inflation pulse is bigger than the Fed admits.

Immigration is the hidden driver no one's modeling correctly. ➤ Surging immigration boosted potential growth to 3% for two years ➤ That flow collapsed in 2025, bringing potential GDP back to ~2% ➤ Now even modest growth may look inflationary The Fed risks overtightening by misreading a shrinking labor force.

@DannyDayan5 Danny’s new framework breaks down financial conditions into growth vs inflation impulses. ➤ Equities = household wealth = demand = inflation ➤ Weaker dollar = higher import prices ➤ Bonds now reflect multiple conflicting signals A one-index FCI doesn't cut it anymore.

The dollar is the Fed’s blindspot and it’s sending a warning. ➤ Rate cut expectations rising even as inflation swaps rise ➤ Dovish Fed tone + Trump’s potential Fed picks = credibility hit ➤ Tariffs + less trade = fewer foreign dollar holdings Dollar weakness could unleash the next inflation wave.

Why hasn’t the market cracked yet? ➤ Equities still love 3–4% inflation if the Fed shrugs it off ➤ Dollar weakness flatters earnings and 30% of S&P 500 revs are foreign ➤ Institutions were underweight & are now forced to chase The party continues until the bond market breaks it.

@DannyDayan5 So what trades work now? ➤ Growth ↑ + Inflation ↑ = bearish bonds, cautious risk ➤ Growth ↑ + Inflation ↓ = go max long risk ➤ Growth ↓ + Inflation ↑ = risk off, long commodities ➤ Growth ↓ + Inflation ↓ = recession trade Dynamic frameworks beat static narratives.

@DannyDayan5 Key takeaways from @DannyDayan5: ➤ The Fed is underestimating the inflation impulse ➤ Immigration, tariffs, and FX are distorting the macro picture ➤ New tools are needed to decode modern financial conditions ➤ The dollar is the tightest constraint on policy

@DannyDayan5 Check out the full episode & more below! ↓ ➤ YouTube 🎥: ➤ Apple 🎙️: ➤ Spotify 🎙️: