Forward Guidance The Fiscal Spiral Has No Off Switch | Weekly Roundup
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May 17, 2025 This week dives into the implications of the Trump-China tariff deal and the structural shifts in political markets. The discussion highlights unsustainable U.S. fiscal deficits and their potential impact on the dollar and bonds. The hosts analyze how AI-driven productivity might influence tech valuations and explore current risks in crypto and tech stocks. They also reflect on generational investment differences and the challenges of adjusting strategies amid rising inflation and shifting capital flows.
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Markets as Political Utilities
- Tyler Neville views markets as political utilities instead of free markets.
- He suggests focusing on credit spreads, volatility, and buyback blackouts for risk management.
Unsustainable U.S. Deficits
- The U.S. cannot close its trade deficit without also reducing its fiscal deficit.
- The large foreign ownership of U.S. assets and widening deficits are unsustainable, implying rising Treasury yields.
Generational Repatriation of Capital
- Major foreign capital is being repatriated back to home countries, especially Asia.
- This repatriation signals a shift away from U.S. markets and challenges the globalization paradigm.