Tom welcomes back Chase Taylor to the show. Chase is a global macro strategist and they discuss the current economic landscape, focusing on several key themes. Chase argues that the economy’s resilience stems from high deficit spending and asset prices, making a recession less probable than in previous decades. He suggests that higher interest rates can be stimulative for the private sector, as they provide significant income for investors and institutions. He notes that while high rates can hurt small businesses, the broader economy remains relatively stable, especially with tech sectors demonstrating low cyclicality.
Regarding fiscal policy, Taylor warns about potential “fiscal dominance” – a scenario where monetary policy becomes subservient to government funding needs. He believes this might occur if the Federal Reserve begins cutting rates inappropriately, even with persistent inflation. The discussion explores potential economic risks, with housing being a critical sector to watch. Taylor sees similarities to the 2008 housing market in terms of home prices versus incomes, but emphasizes that current credit quality and household balance sheets are much stronger.
On trade policy, Taylor is skeptical about reshoring efforts, arguing that blanket tariffs could create more economic complications than benefits. He highlights the complexity of global supply chains and the potential inflationary impacts of aggressive tariff strategies. The labor market remains a key indicator, with Taylor observing a cooling but not collapsing job market. He sees potential job market stress in sectors like home building and healthcare, particularly following recent legislative changes.
Timestamps:
0:00:00 – Introduction
00:01:04 – Recession Concerns?
00:04:44 – High Rates Stimulative?
00:07:20 – Real/Rates of Return
00:08:46 – Fiscal Dom. Doom Loop
00:11:52 – Data, Powell & Rates
00:15:06 – Fed Q.T. To Q.E. & Tools
00:19:15 – Short Term Debt Impacts
00:24:45 – Housing Mkt. Trajectory
00:31:14 – Job Numbers & Revisions
00:35:58 – Manufacturing & Tariffs
00:39:48 – China & Tariff Alternates
00:45:16 – Dollar Outlook & Bears
00:49:40 – Is Gold Overbought?
00:52:04 – Dollars Effect on Gold?
00:54:04 – Mining Sector & Profits
00:56:26 – Miners & Taking Profits
00:58:50 – Summer Seasonality
01:02:40 – Concluding Thoughts
Guest Links:
Substack: https://pineconemacroresearch.substack.com
X: https://x.com/pineconemacro
Website: https://www.pineconemacro.com
Website: https://bulwarkcapitalmgmt.com
Chase Taylor is a macro trader and the global macro strategist and editor at Pinecone Macro Research. He recently became Head of Research at Bullwark Capital Management. Chase launched PMR in 2018, where he provides unique macro insights and analysis in a weekly and monthly research product.
Chase does not come from Wall Street or business school, but the military. He prides himself on being a self-taught macro thinker and practitioner. Chase started in the Air Force working on B-1 Bombers, but spent most of his career as a geospatial intelligence analyst, working on strategic and tactical intelligence problem sets. He has also worked in acquisitions at a research laboratory focused on rocket propulsion.
Chase combines the analytical techniques he learned in the intelligence community with a unique focus on history and nature to create a distinctive macro framework. He combines technical analysis, fundamental changes, and the power of narratives and reflexivity to uncover asymmetric investments.
