Simon White, a Macro Strategist at Bloomberg and co-founder of Variant Perception, dives deep into the potential fallout of rising U.S. treasury debt and its implications for the economy. He discusses the risks of 'fiscal QE' igniting inflation and higher bond yields, possibly leading to a bond market crisis. The episode also explores the conflicting roles of fiscal policy and the Federal Reserve, tariff impacts on inflation, and the future of commodities amidst economic uncertainty. White offers valuable insights on navigating these turbulent financial waters.
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Market Defies Tariff Concerns
The stock market is at new highs despite tariffs and ongoing uncertainties, which is puzzling from a fundamental perspective.
Market optimism persists due to low recession risk and the presence of excess liquidity, although cracks are starting to show in the jobs market.
insights INSIGHT
Inflation Rising Beyond Tariffs
Inflation is rising mainly due to cyclical economic factors independent of tariffs, which haven't fully impacted prices yet.
Tariffs will likely reinforce inflation but are not the main inflation driver at this stage.
insights INSIGHT
Fiscal QE Undermines Fed Independence
Fiscal QE threatens Fed's operational independence due to massive short-term debt issuance and Treasury's control over liquidity.
Issuing more T-bills increases money-like assets, boosting liquidity and fueling inflation while complicating monetary policy.
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The US is ramping up its issuance of Treasury debt.Today's expert is concerned that this form of "fiscal QE" will lead to a resurgence in inflation, higher bond yields, a risk asset sugar high, a weaker dollar...and quite possibly a development market bond crisis.To understand why, today we're fortunate to sit down with Simon White, Macro Strategist at Bloomberg and co-founder of the investment-advisory firm Variant Perception.
WORRIED ABOUT THE MARKET? SCHEDULE YOUR FREE PORTFOLIO REVIEW with Thoughtful Money's endorsed financial advisors at https://www.thoughtfulmoney.com#bondmarket #debtcrisis #deficit 0:00 - Global Economic Outlook5:58 - Why Markets Ignore Risks7:34 - Market Optimism and Trump Policies9:17 - Tariff Burden Sharing12:54 - Tariffs and Inflation15:37 - Tariff Strategy Evaluation18:51 - Strategic Tariff Implications22:00 - Fiscal QE Definition and Impact29:38 - Fiscal QE and Fed Policy Conflict32:37 - Unemployment and Recession Risks38:18 - Fiscal QE’s Market and Economic Effects44:32 - Bond Crisis and Economic Outlook46:40 - Financial Repression and Stablecoins50:06 - Investment Implications58:32 - Closing and Resources1:01:17 - Parting Advice on Health and Wealth_____________________________________________ Thoughtful Money LLC is a Registered Investment Advisor Promoter.We produce educational content geared for the individual investor. It’s important to note that this content is NOT investment advice, individual or otherwise, nor should be construed as such.We recommend that most investors, especially if inexperienced, should consider benefiting from the direction and guidance of a qualified financial advisor registered with the U.S. Securities and Exchange Commission (SEC) or state securities regulators who can develop & implement a personalized financial plan based on a customer’s unique goals, needs & risk tolerance.IMPORTANT NOTE: There are risks associated with investing in securities.Investing in stocks, bonds, exchange traded funds, mutual funds, money market funds, and other types of securities involve risk of loss. Loss of principal is possible. Some high risk investments may use leverage, which will accentuate gains & losses. Foreign investing involves special risks, including a greater volatility and political, economic and currency risks and differences in accounting methods.A security’s or a firm’s past investment performance is not a guarantee or predictor of future investment performance.Thoughtful Money and the Thoughtful Money logo are trademarks of Thoughtful Money LLC.
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