Hidden Forces
Why Fiscal Policy Is What Really Matters For Investors | Kevin Muir
Mar 31, 2025
In this discussion, Kevin Muir, an independent trader and writer for Macro Tourist, delves into the significance of fiscal policy in shaping investment landscapes. He argues that government spending has driven investor outperformance over the past five years, often overshadowing the impact of monetary policy. Muir also explores the risks of fiscal austerity, trade tariffs, and their potential to depress asset prices and the U.S. dollar. Additionally, he highlights emerging investment opportunities in global markets, particularly in response to evolving political strategies.
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Quick takeaways
- Fiscal policy has become a critical factor for investors, outperforming traditional monetary policy and driving significant investment returns over the past five years.
- A notable shift towards European and Asian equity markets is emerging, influenced by US market concentration risks and the search for undervalued investments.
Deep dives
The Impact of Fiscal Policy on Investment
Fiscal policy has emerged as a significant factor influencing investment outcomes, especially over the last five years. Government spending has been identified as a major source of alpha, outpacing traditional monetary policy measures which have been largely overlooked. This has led to a reassessment of investment strategies, as understanding the implications of government spending can open up new opportunities for investors. As fiscal measures continue to evolve, recognizing their impact on various asset classes, particularly in the equity and bond markets, will be crucial for effective investment decisions.
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