In today’s briefing:
- Populism Meets Productivity: The Economic Roadmap of Trump’s Second Term
- Known Unknowns and Unknown Unknowns
- The 60/40 in an Era of American Unexceptionalism
- Complex Anatomy of the Tariff Crisis Presents Financial Markets With Multiple Permutations
- [IO Technicals Weekly 2025/14]: Price Bearishness to Persist
Populism Meets Productivity: The Economic Roadmap of Trump’s Second Term
- Trump’s economic agenda faces structural realities in manufacturing, immigration, and energy that challenge populist solutions and require targeted approaches.
- Successful policy implementation demands balancing protectionist promises with market dynamics through strategic industrial policy and graduated enforcement.
- A pragmatic roadmap includes sector-specific interventions, workforce development, and new success metrics beyond traditional economic indicators.
Known Unknowns and Unknown Unknowns
- Trump’s main objective in his trade war is to erect a trade wall around China, but it’s unclear how successful he will be as his allies are wavering.
- The U.S. economy is weakening. At a minimum, the markets will undergo a growth scare, though an actual recession isn’t a certainty.
- The challenge in the long term is the continuation of American Exceptionalism, consisting of long U.S. market leadership, long multi-nationals and a buy-the-dip mentality
The 60/40 in an Era of American Unexceptionalism
- Markets are increasingly concerned about the USD and Treasury assets as a safe haven.
- Investors can consider diversifying into a basket of non-U.S. sovereign bonds, but at the price of a lower coupon rate and a history of underperformance.
- The current combination of technical, sentiment and fundamental conditions indicate the stock market is ripe for a short-term relief rally, with a substantial risk of a much deeper downdraft.
Complex Anatomy of the Tariff Crisis Presents Financial Markets With Multiple Permutations
- US financial markets are currently in the aftershocks phase that always follows a crisis triggering event. Markets are often divorced from reality during these periods and pricing becomes irrational.
- Tariffs will negatively affect US economic growth, but the long-term impact depends on corporations’ capital allocation response to a new trading environment. Future distribution of national income will become important.
- Tariffs will adversely impact the equity risk premium, while Fed policy conduct will also play a role. Corporate profit expectations for 2025 have been lowered. Long-term growth estimates remain intact.
[IO Technicals Weekly 2025/14]: Price Bearishness to Persist
- Managed Money switched to net short, Physicals switched to net long while FIs increased net long positions last week.
- Prices touched a high of $99.25/ton on 17/Apr and a low of $96.55/ton on 14/Apr. It traded in a range of $2.70/ton during the week.
- Based on seasonality, SGX IO Futures May contract trades 23.8% below its last 5-year average ($128.37/ton).
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
