Dominique Dwor-Frecaut
Summary The administration’s dollar policy seeks to reconcile a strong dollar with a manufacturing renaissance. Dollar and balance of payments trends seem to signal some erosion in foreign confidence in dollar assets. The election results could support the dollar primarily through reduced policy uncertainty: stronger congressional constraints on executive discretion could reduce the risk premium […]
Dominique Dwor-Frecaut
Summary Despite recent announcements, the administration has kept the average tariff rate near 11%, well below the 20% Liberation Day peak. This restraint likely reflects both the limited economic and market benefits of tariffs and their substantial political costs. Tariff policy is therefore unlikely to become a renewed source of inflation. Market Implications I expect […]
Dominique Dwor-Frecaut
Summary With the Iran ceasefire already in doubt less than 24 hours after being agreed, I outline three post-war scenarios. My base case is a low-intensity conflict with Iran retaining control of the Strait of Hormuz (SOH), keeping oil around ~$125/bbl as it manages flows to fund reconstruction—triggering a US recession. The worst-case scenario involves […]
Dominique Dwor-Frecaut
Summary The Supreme Court’s decision striking down IEEPA tariffs materially constrains the administration’s trade policy discretion and, in the long run, lowers policy uncertainty. Given that uncertainty has weighed on household and business spending, its decline could support a recovery. In the short run, however, the Supreme Court ruling creates new uncertainty on tariff levels […]
Bilal Hafeez
Obsessing over the next hour’s move in markets can make us lose sight of the big picture – and what bigger question is there than what ends a dominant civilisation? Historians have debated this for centuries. But to avoid getting bogged down in endless two-sided arguments, I find Arnold Toynbee’s view in his epic ‘A […]
Ben Ford, Bilal Hafeez
Summary Trump will be sworn in on 20 January at 12PM ET (5PM UKT). He is expected to deliver over 25 executive orders on his first day in office. This aligns with the new direction US presidents are taking to deliver early results. The first wave of orders is rumoured to focus on initial tariff […]
Bilal Hafeez
Speech given to members of a leading UK political party in London on 5 December 2024. The UK’s Fundamental Problem: Productivity Rather than talking about the recent UK budget or other such announcements, I would rather discuss the broader context of what hampers the UK economy. From there, we can then understand which are the […]
Dominique Dwor-Frecaut
Summary The incoming Treasury Secretary will likely have two key priorities. First is funding the government: expect lower bill issuance and a lower TGA target at the February QRA. Second is enacting Trump’s electoral promises, which will probably widen the budget deficit. Market Implications Likely fiscal stimulus adds to my conviction of no cuts in […]
Dominique Dwor-Frecaut
Summary On the eve of election day, betting markets and polls show Vice President Kamala Harris and presidential candidate Donald Trump neck and neck. The Harris campaign has greatly outraised the Trump campaign, and the former has a much larger cash balance to spend on the last few weeks of the campaign, which could bring […]
Macro Hive
Summary A Republican sweep (red WH and Congress) could result in stagflation and force the Fed to hike. Meanwhile, a Democratic sweep (blue WH and Congress) would likely align with the Fed’s current projections. Market Implications A Trump victory would likely lead to bear steepening in the yield curve, and a stronger USD especially vs […]
Dominique Dwor-Frecaut
Summary Vice President Kamala Harris is struggling to widen her small lead over presidential nominee Donald Trump but continues to outraise him. Should Harris win, pollsters expect a red Congress while betting markets see a blue or split Congress as most likely. Market Implications I still expect the Fed to cut two more times in […]
Dominique Dwor-Frecaut
Summary Vice President Kamala Harris’ nationwide popularity is increasing but she is still within the margin of error in the swing states. The Democrats still appear likely to lose the Senate while the House could be in play. Market Implications I expect the Fed to cut 50bp this week, 100bp this year and 150bp next […]
Ranen McCormick
Summary The financial industry has witnessed the dramatic rise of private equity and index funds over the last two decades. Now, just a handful of asset management institutions dominate American finance, as John Coates reveals on our recent podcast and in his new book, The Problem of Twelve. Political hostility to private equity and index […]
Dominique Dwor-Frecaut
Summary Vice President Kamala Harris is polling ahead of presidential candidate Donald Trump but remains within the margin of error. Harris’ policies involve stronger competition policies as well as social spending to be funded by unspecified taxes on wealthier Americans and businesses. Even if Harris wins the White House, she will likely face a split […]
Ben Ford
Summary BLS employment growth revisions (3PM UKT, Wednesday) are forecasted to be the largest in 15 years. However, the Fed are well prepped for revisions; Powell has already been vocal on the topic. Harris (Thursday) is due to speak on the final day of the DNC. She has already revealed a lot about her economic […]
Dominique Dwor-Frecaut
Summary Vice President (VP) Kamala Harris is virtually assured of the nomination. Her nomination at the top of the Democratic ticket has made the race more competitive. Trump administration economic policies might not be as destabilizing as I initially feared. Market Implications I still expect one insurance Fed cut in 2024. Harris to Become Democratic […]
Dominique Dwor-Frecaut
Summary Following the presidential debate, Donald Trump is surging in the polls and betting markets. A Supreme Court ruling has effectively ensured Trump will not have to stand in new trials before the elections. Trump’s vice president (VP) pick by 15 July could indicate his administration’s likely policies. The likelihood of President Joe Biden exiting […]
Dominique Dwor-Frecaut
Summary Government funding for several agencies expires on 1 March. There is a chance of a temporary shutdown, with limited economic consequences. Market Consequences A shutdown would likely be too short-lived to impact growth and inflation, and therefore Fed policy. I continue to expect the first Fed cut at the June FOMC meeting. Routine Theatrics? […]
Dominique Dwor-Frecaut
The betting market for the Democratic nomination in next year’s presidential elections is grossly mispriced. President Biden has negative odds: this means betting markets are pricing zero chance of Biden not being nominated. In reality, the chance of Biden withdrawing from the race could be about 20% based on poor performance in the polls, third […]
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