So gotta game out the macro implications of an assumed world where we get tariffs reverting from 30% effective tariff rates to 10% ish and where such a situation nets out the economy in that context. Here’s some random thoughts and ideas I’m thinking through: - A shit ton of imports have flooded into the US and major companies are juiced up in inventories - Consumers have frontloaded a lot of spending and will probably chill out now that tariffs look to be off ramping - Net exports will probably whipsaw in the opposite direction next few months and be a positive tailwind for GDP contribution as imports will be much lower moving forward - Surely a lot of paused fixed investment will now be ramped up again now that there’s been a good enough improvement in certainty - Tax bill and deregulation will probably shift to become the Trump admin’s priorities now paired with incremental improvements to tariff dynamic. A 10% global tariff will fund some of the tax cuts but will also likely See a widening of fiscal deficits from the tax bill - Inflation is in a very interesting spot. You have oil that is at multi year lows and the next two months will probably see very soft headline numbers from this oil move and that will then trickle into other sub components too. Assuming that we get continued off ramping of tariffs paired with cpi in the gutter due to oil, I think you’re clearing the way for meaningful Fed cuts in the summer. - The labor market is extremely cool. I think we will see some sort of a rebound in coming months due to corporates that avoided hiring decisions begin to move again but not in any way that would get the Fed hawkish about anything. On net, when I put that all together in balance I’m roughly at: - Bearish us long bonds - Neutral to modestly bullish 2y notes - Bullish US equities short term especially as you see a bounce in the dollar here as speculative capital returns to long US - more bullish ROW equity relative to the US as I think most stagnant non-US countries are gonna run wider trade deficits moving forward as a function of trade deals made with the US (e.g higher nato spending etc) + I think the Klaus thesis Shrub talks about is a multi year one that is only just beginning of capital going home - Bearish gold - Bullish oil - Bullish bitcoin (turbo charge of ROW fiscal Impulse that I wrote about weeks ago + marginal improvements from the US) That’s roughly how I’m thinking about things. Have a good week everybody.