Monetary Matters with Jack Farley Tariffs Unlikely To Derail Strong Economy—But Market Risk Has Risen | Prometheus Macro’s Aahan Menon
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Mar 14, 2025 Aahan Menon, an expert in systematic macroeconomics at Prometheus Macro, advises on hedge fund strategies. He discusses the limited impact of tariffs on corporate profits and the economy, emphasizing a need for integrating market data with macro fundamentals. The conversation highlights the intriguing relationship between stock momentum and economic trends, suggesting current negative signals could present buying opportunities. Menon also dissects GDP growth predictions and the resilience of consumer spending amid cautionary corporate signals, stressing the complexities of navigating today's market dynamics.
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Market Sell-off Driven by Positioning
- The current market sell-off appears to be driven by positioning unwinds rather than fundamental economic factors.
- This is indicated by a disconnect between falling equities and stable commodity markets.
Tariff Impact on GDP
- Tariffs primarily impact the composition of nominal GDP, shifting the balance between real growth and inflation.
- The main concern is their potential negative impact on corporate profits and consumer spending.
Limited Impact of Tariffs on Profits
- Analysis suggests that even a tenfold increase in current tariff levels would have a negligible impact on corporate profits.
- This is based on historical data and the small share of tariff revenues relative to total economic activity.