RiskReversal Pod Mike Wilson on Volatility, Policy Shocks & The Real Tariff Endgame
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May 23, 2025 Dan Nathan interviews Mike Wilson, Chief U.S. Equity Strategist and CIO at Morgan Stanley, who offers insights into market trends and economic policies. They discuss the intricacies of trade and tariffs, predicting a volatile yet constructive market outlook for the second half of the year. The conversation examines the implications of supply constraints, the impact of AI on market dynamics, and the complexities within the bond market. Wilson also explores the notion of rolling recessions and compares strategies of hedge funds and retail investors, highlighting adaptability in trading.
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Trump 1.0 vs Trump 2.0 Economy
- Trump administration's first term focused on reflating the economy after recession with borrowing and spending.
- The second term faces no slack in economy and inflation pressure, requiring negative growth policies first.
Private Economy Soft Recession
- Private economy has been effectively in a soft recession for 2-3 years despite government-heavy economy.
- Deregulation and AI advancements could revive private sector growth in the latter half of the year and into 2026.
Japanese Yields and Global Impact
- Rising Japanese yields could cause Japanese investors to repatriate funds from US Treasuries.
- This may strengthen the yen and potentially trigger a global market contagion through leverage unwind.