Monetary Matters with Jack Farley The Holy Grail of Macro | Prometheus Macro’s Aahan Menon on Why Tariffs Won’t Cause A Recession And Why Buying Dips Only Works In An Expansion
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May 20, 2025 Aahan Menon, founder and CEO of Prometheus Macro, shares his insights into macroeconomic strategies and the nuances of investing. He discusses how tariffs minimally impact the economy while stressing the importance of domestic consumption. Aahan also outlines key investment strategies based on systematic analysis, emphasizing beta timing and momentum for optimal returns. The conversation touches on the complexities of predicting economic indicators and the necessity of adapting investment philosophies across different age groups for better alignment with financial goals.
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Why Tariffs Aren't Recessionary
- Economic data shows minimal tariff impact because imports and exports are a small part of the US economy.
- The most significant drag from tariffs would be on business and consumer confidence, which has largely reversed.
Stable US Growth and Inflation Outlook
- US economic growth hovers around 1-2%, with slight improvement possible if conditions stay stable.
- Inflation is moderate and largely influenced by technical factors like shelter costs, suggesting a steady economic state.
The Three Drivers of Returns
- Future asset returns arise from three factors: carry, momentum (trend), and mean reversion.
- Prometheus Macro dynamically balances exposure to these factors, adjusting based on macro conditions to optimize returns.