Excess Returns The Monumental Miscalculation | Jared Dillian on Tariffs, Fed Risks, and Where Markets Go from Here
Apr 26, 2025
Jared Dillian, the contrarian economist behind the Daily Dirt Nap newsletter and host of the Macro Dirt Podcast, dives deep into the current market landscape. He argues that tariffs may actually be deflationary, challenges the notion of a strong dollar in the long run, and shares insights on the shift towards international stocks. Dillian also discusses his unique investment strategy—an 'Awesome Portfolio'—and the risks of protectionism while highlighting the evolving importance of social media in gauging market sentiment.
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Tariffs are Deflationary in Size
- Large tariffs lead to demand destruction, resulting in deflationary effects on the economy.
- Small tariffs can be inflationary, but big tariffs cause prices to drop due to reduced demand.
Dollar Faces Long-Term Decline
- In the long run, the dollar is likely to decline significantly, possibly by at least 20%.
- However, a short-term rally in the dollar could shake out consensus bearish positioning.
Globalization's Price Impact Anecdote
- Jared shared a story about how globalization drastically lowered the prices of baseball pants and doormats over decades.
- This illustrates how free trade has increased the U.S. standard of living by making goods much cheaper.