Excess Returns

Heading to Recession Island | Will the Trump and Powell Puts Help Us Reverse Course? | Andy Constan

50 snips
Mar 27, 2025
Andy Constan, founder of Damped Spring Advisors, shares insights on the U.S. economy's precarious path. He introduces his 'Island Framework,' showcasing the shift from 'Higher for Longer Island' to 'Recession Island.' Andy discusses the influence of Trump and Powell's policies on market dynamics, emphasizing why bonds may outperform stocks now. He also delves into the implications of tariffs and national debt, as well as long-term inflation drivers like demographics and deglobalization's impact—offering a thorough analysis for investors navigating today's volatile landscape.
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INSIGHT

Policy Alignment for Slower Growth

  • Trump, Powell, and Bessant aim to slow economic growth to curb inflation.
  • This strategy favors bonds over stocks, marking a shift from Trump's previous stock market focus.
INSIGHT

The Illusion of 'Puts'

  • The "Trump Put" and "Powell Put" represent the belief that authorities will intervene during market crises.
  • These safety nets are less reliable and further "out of the money" than many investors assume.
INSIGHT

Navigating the Economic Landscape

  • Andy Constan has shifted his economic outlook from "Higher for Longer Island" to the "Slowdown Sea", moving towards "Recession Island".
  • This change is driven by tightening financial conditions and the Fed's pause on interest rate cuts.
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