Chad Walker

CORRECTION: Dale 2048 🇺🇸. I have young children whom I would like to see grow up before I get assassinated. FWIW, throughout history, people who “red pill” the system tend to get assassinated: the Gracchi brothers, Abraham Lincoln, Mahatma Gandhi, Huey Long, JFK, MLK, etc. THEY—the billionaires and trillionaires who have purchased controlling stakes in Congress, the White House, the Supreme (and lower) Court(s), AND THE MEDIA—have a deeply vested interest in preventing the following: 1. Campaign finance reform so that every citizen’s vote actually counts as one vote, rather than preserving the current system whereby the top 1% pay top dollar to rig election outcomes, legislation, and regulation on their behalf AT OUR CHILDREN’S EXPENSE. 2. A single flat tax that treats every dollar of realized income the same. 3. No tax loopholes to favor certain activities and interests, or to promote certain behaviors. As far as I’m concerned, the desire for people to procreate with desirable partners and take adequate care of their families—both while alive and posthumously—is genetic. You don’t need to corrupt the tax code to promote these outcomes. Human beings will do these things regardless of whether there are tax “incentives” for them—which we know largely favor the rich. 4. Trust-busting to reduce the power of monopolies, duopolies, and monopsonies over our economy and promote inclusive innovation. 5. Mandating that the Fed target stability in the US dollar vs. a basket of commodities or a neutral reserve asset like gold, OR removing the Fed’s “maximum employment” mandate—the mandate that causes it to consistently justify debasing our currency and perpetuating the historic Cantillon effect that is destroying our society—if returning to a harder currency regime is too painful. These are the kinds of “radical” (read: common-sense) ideas that can get me killed if I’m not careful—hence waiting until 2048. “The Lord is my strength and my defense; he has become my salvation.” —Exodus 15:2 Jesus Christ and I love you and your children. Change your attitude towards our corrupt political system for them before it’s too late. Reminder: The US has already fought a violent, bloody revolution and a violent, bloody civil war because The People have generally agreed with me and not with The Privileged Few. Unfortunately, history confirms that revolutions and wars are ALWAYS much worse for BOTH sides than everyone realizes at the outset. I believe God pulled me up from the bottom 0.001% of the K-shaped US society to bring glory to Him by helping prevent this tragic outcome—or by helping our wonderful nation heal after it. I pray every day that I’ll be successful in either mission. With love, —Skipper ❤️+🤍+💙=💜

Here you go, my friends: Paradigm A: The 2020–21 lurching into fiscal dominance which helped catalyze the geopolitically driven supply-demand imbalance in the US Treasury bond market that is likely to persist – and widen – throughout the duration of this Fourth Turning. Paradigm B: History confirms that when sovereigns get too indebted – specifically when both the stock and flow of sovereign debt supply increasingly exceed available resources to capitalize the leverage – there are only three options to remedy the issue. Paradigm B is the cut phase of the cut → grow → print sequence required to address the geopolitically driven supply-demand imbalance in the US Treasury bond market. Cutting requires a reduction in fiscal expenditures and a reduction in trade deficits; both outcomes increase net national savings. Paradigm C: History confirms that when sovereigns get too indebted – specifically when both the stock and flow of sovereign debt supply increasingly exceed available resources to capitalize the leverage – there are only three options to remedy the issue. Paradigm C is the grow phase of the cut → grow → print sequence required to address the geopolitically driven supply-demand imbalance in the US Treasury bond market. Growing requires the adoption of a growth-friendly policy mix featuring tax cuts, deregulation, and credit easing. The goal of the grow phase is to delever the public sector balance sheet by increasing the denominator (e.g., GDP, GDI, domestic liquidity) faster than the numerator (i.e., sovereign debt). Paradigm D: History confirms that when sovereigns get too indebted – specifically when both the stock and flow of sovereign debt supply increasingly exceed available resources to capitalize the leverage – there are only three options to remedy the issue. Paradigm D is the print phase of the cut → grow → print sequence required to address the geopolitically driven supply-demand imbalance in the US Treasury bond market. Printing requires an erosion of central bank independence that results in the monetary authority monetizing debt – either explicitly via quantitative easing (QE) and/or yield curve control (YCC), or implicitly via reserve management operations (RMOP). The goal of the print phase is to lessen the impact of crowding out by the bloated public sector balance sheet upon the private sector. The Treasury market is atop the global capital structure, so until the US dollar is no longer the dominant reserve currency, it will always attract the capital it needs at the expense of the private sector – particularly low-to-median-income households, small businesses, and interest-rate-sensitive sectors like housing and consumer durable goods. K-Shaped Economy: A K-shaped economy is an economy where high-income households, large corporations, and cash-rich sectors like technology are incrementally achieving prosperity, while low-to-median-income households, small businesses, and interest-rate-sensitive sectors like housing are increasingly falling behind due to limited availability of capital, too-high interest rates, unfair tax policy that overwhelmingly favors capital over labor income, among other things. In aviation terms, a K-shaped economy features the haves flying privately and safely to fancy vacation islands, while the have-nots are flying low-budget airlines to the middle of nowhere… and the planes crash frequently. The post-COVID business cycle is a clear example of a K-shaped economy. E-Shaped Economy: An E-shaped economy is an economy where high-income households, large corporations, and cash-rich sectors like technology are incrementally achieving prosperity alongside low-to-median-income households, small businesses, and interest-rate-sensitive sectors like housing and consumer durable goods. E-shaped economies are achieved only when fiscal and monetary policy are appropriately calibrated to “grow the economic pie” and distribute wealth morally – two outcomes that many have been deluded into believing cannot coexist due to the loss of Christian values from American politics and the advent of their replacement: economic liberalism, which ranks growing corporate profits above all other human pursuits, including enriching the lives of the very people that create the profits. In aviation terms, an E-shaped economy features the haves and have-nots flying together on a jumbo jet, whereby upper-income cohorts sit up front in first class, middle-income cohorts sit in economy plus, and low-income cohorts sit in the back in basic economy; each cohort takes off, lands – and, occasionally, crashes – together. The 1990s business cycle is a clear example of an E-shaped economy. I hope this education blesses you as both an investor and voter in that it inspires you to make wise choices regarding your family's financial future and the future of our society. Capitalism taken to its (il)logical extreme is no better — perhaps far worse — than socialism. Let's fix our broken form of capitalism with a better version of capitalism before it's too late. I love you. God loves you too. May God bless America. —Skipper 💜🇺🇸

Good morning, and God bless, #Team42! Today’s Key Macro Question(s): Will the @federalreserve be forced to HIKE rates during an economic downturn like an EM central bank? Stocks are rebounding modestly as optimism emerges from initial US-Japan trade negotiations. @realDonaldTrump posted “A Great Honor to have just met with the Japanese Delegation on Trade. Big Progress!” highlighting his desire to preemptively celebrate a US-Japan trade deal. Per our 4/12 Around the Horn: “Geopolitically driven stress in the Treasury market is accelerating the transition from “US exceptionalism” to the US being an emerging market in capital flight risk terms. President Trump may be operating under the assumption that the US is “too big to fail” and foreign creditors may check him on that. Markets thought Lehman was “too big to fail” too. This transition has several profound implications for asset markets: 1) the rest of the world has much more negotiating leverage than anyone in the Trump administration is willing to admit publicly, increasing the probability that reciprocal tariff rates are broadly lowered in deals that President Trump will celebrate as “wins”, but are likely less effective than the Phase One China trade deal and USMCA he negotiated during his first term—we wouldn't be here today if the “art of the deal” actually worked back then…” Per our 4/15 Leadoff Morning Note: “Yesterday we asked if Trump was losing his own trade war. Thus far, the answer is “yes,” and the answer may remain “yes” at the end of the process for all the Fourth Turning polycrisis reasons we detailed in our 4/10 Leadoff Morning Note, 4/11 Leadoff Morning Note, and 4/12 Around the Horn webcast.” Check and check. The US-Japan delegations already have plans for a second round of talks later this month, according to Japan's chief negotiator Ryosei Akazawa. Moreover, the yen weakened after Japan’s Akazawa said currencies weren't discussed, alleviating fears the US would push for a stronger yen. Countries are eager to negotiate with a wounded US after the Treasury bond market forced @POTUS to temporarily pause reciprocal tariffs, including a suspended 24% tariff on all Japanese imports. Existing tariffs remain, however, including a 10% baseline across-the-board tariff and 25% tariffs on autos, steel, and aluminum. We continue to observe evidence of accelerated de-globalization amid a transition to a multi-polar world—two outcomes we have been explicitly preparing @42Macro clients for since the summer of 2023 via our Investing During a Fourth Turning Regime presentation. Specifically, the Trump administration is preparing to pressure countries to limit trade with China as part of US tariff negotiations, prompting Chinese President Xi Jinping to advocate an "Asian family" and regional unity to counter US influence. FYI, if globalization was disinflationary, then de-globalization is inflationary. Yes, it’s literally that simple. To that point, yesterday at the Economic Club of Chicago, Federal Reserve Chair Jerome Powell reiterated the Fed's responsibility to ensure tariffs don't trigger persistent inflation, saying the central bank must "keep longer-term inflation expectations well anchored" and ensure price increases remain temporary. Powell emphasized the tension between the Fed’s dual mandate of maximum employment and stable prices, noting, "without price stability, we cannot achieve the long periods of strong labor-market conditions that benefit all Americans." Powell also reaffirmed the Fed's patient approach toward policy rate adjustments. Recall that he said the following on April 4: "For the time being, we are well positioned to wait for greater clarity before considering any adjustments to our policy stance." In short, Powell was keen to reiterate his pushback on market expectations for a relatively quick monetary policy response to the slowdown in growth. Moreover, Powell’s emphasis that the Fed must “make certain” that a tariff-driven acceleration in inflation doesn’t flatter long-term inflation expectations suggests he is prepared to resist easing for much longer than risk assets and President Trump would prefer. Trump criticized Powell Thursday on Truth Social, saying Powell "is always TOO LATE AND WRONG," arguing the Fed "should have lowered Interest Rates, like the ECB, long ago," adding his "termination cannot come fast enough." Perhaps President Trump should try the carrot instead of the stick? He’s been publicly beating Jay Powell since two global debt refinancing air pockets ago, back in 2018, with nothing to show for it. Lastly, Powell characterized recent market turmoil as normal volatility amid uncertainty, stating "markets are doing what they're supposed to do" and functioning "just about as you would expect." Powell noted the Fed is not close to ending its balance sheet unwind, as reserves remain abundant and a slower runoff allows for continued portfolio shrinkage. Hawkish. Treasuries gained and stocks sold off following Powell's resolutely hawkish speech. This is consistent with our view that the Fed may be forced to HIKE rates during this or future growth downturns to attract capital into the Treasury bond market. After all, that is precisely what twin-deficit emerging market central banks have always done when foreign investors exhibit nervousness regarding domestic or global imbalances. The geopolitically driven supply-demand imbalance in the Treasury bond market checks both boxes. If you found this note helpful, please like and share. Thank you! Consistently making money and protecting gains in financial markets require a lot of time, expertise, and computational power. Investors partner with 42 Macro because we do the heavy lifting and answer the hard questions for them. See for yourself: 42macro.com/42-macro-sample-…. Have a great day! -Skipper

Good morning, and God bless, #Team42! Today’s Key Macro Question(s): Will risk assets retest the lows? Tech stocks dropped after the US cracked down on Nvidia $NVDA chip exports to China and ASML $ASML NA posted weak results, reigniting trade-war fears. NVDA and ASML are down -6% (premarket) and -5%, respectively, this morning. China is holding out on trade talks until the Trump administration "shows more respect" by toning down its rhetoric, per a source familiar with Beijing’s stance. In our view, the Trump administration will show China more respect and negotiations will eventually occur because we believe the Trump administration is already in the “to de-escalate” phase of the “escalate to de-escalate” mantra from @realDonaldTrump's “art of the deal”. We can clearly observe this via the 90-day pause on reciprocal tariffs, carve outs for consumer electronics and other sensitive items, and the evolution of @USTreasury @SecScottBessent to becoming the dominant mouthpiece of the administration. In just the past ~week alone, Secretary Bessent appeared on the following networks in longform interview format: CNBC (4/8): youtu.be/adNVYPWu92Y?si=n2a2… Fox Business (4/9): youtu.be/ySJ6Wmd21oA?si=rj3f… C-SPAN (4/9): youtu.be/NzW-htUshQQ?si=N8rj… Bloomberg (4/14): youtu.be/MuNo6fhuRpk?si=v8Yl… Yahoo Finance (4/15): youtu.be/FPdkZlU8UfM?si=jH1k… It cannot be stressed enough that the Treasury Secretary sitting down with Yahoo Finance (no disrespect) on Tax Day—the Treasury Department’s Super Bowl—to promote trade negotiations, tax cuts, and deregulation says a lot. There was a dramatically increased emphasis on these pro-growth, pro-markets policies in these recent interviews compared to his interviews over the past few months. Moreover, Bessent’s pivot away from his prior guidance of an economic “detox period” and his prediction that it would become “Trump’s economy in 6–12 months” to taking credit for the resiliency of the economy in Q1 data suggests our data-driven view that the bond market activated the “Trump put” is likely correct. If so, then several of the key takeaways from our recent research reports are likely correct as well: “We view the current meltdown in the Treasury market as part and parcel of the Fourth Turning polycrisis that we have been preparing 42 Macro clients for since the summer of 2023 when we first debuted our Investing During A Fourth Turning Regime presentation. One of the key takeaways from the presentation is our structural bearish bias on Treasury bonds and expectation that the US would have a cascading series of EM-style financial crises that require greater and greater monetary debasement and financial repression by the Fed to calm Treasury market dysfunction. We put this deeply researched view into action when we pivoted our systematic KISS Portfolio Construction Process permanently out of Treasuries and into Gold last fall. Ultimately, the Fed will be forced to go to unprecedented lengths to plug the growing, geopolitically driven supply-demand imbalance in the Treasury bond market once the world deems the US to be in fiscal crisis—an outcome we still anticipate by 2030.” –4/9 Leadoff Morning Note “All told, the fact that the “Trump put” was exercised—or at a minimum rolled to July 9—due to stress in the Treasury bond market has both positive and negative implications. On the positive side, it clears the way for, at worst, a retest of the lows in the interim and, at best, a sustained uptrend from here. On the negative side, it is confirmation of the growing, geopolitically driven supply-demand imbalance we have been warning about in the Treasury bond market… [T]he distribution of probable economic outcomes is as wide as most investors have ever seen, so remain dispassionate and ready to pivot if/when KISS and Dr. Mo pivot. Odds are you’ll thank them later even if you/we do not trust or fully understand why in the moment. The market is smarter than we are, and someone always knows something (e.g., "THIS IS A GREAT TIME TO BUY!!! DJT” at 9:37am ET yesterday).” –4/10 Leadoff Morning Note “Elsewhere, the House’s narrow 216-214 adoption of the Senate’s budget resolution advances Republican efforts to deliver up to $5.3tn in tax cuts over 10 years and raises the Debt Limit by $5tn in exchange for a minimum of $4bn in spending reductions. After weeks of hardball, House fiscal hawks gave up on demanding binding cuts and instead settled for a handshake deal with the Senate to balance out the cost of tax cuts. That deal erases a March win for House conservatives, who had raised the spending cut floor from $1.5tn to $2tn and included a provision to reduce the tax cut allowance if those offsets weren’t met. This erosion of fiscal restraint represents an incremental tailwind to the structural bear case for the US dollar and an incremental tailwind to the structural bull case for Gold. This vote followed Trump’s announcement of a 90-day pause on tariffs that had been rattling markets and recession fears and represents a concerted effort by the Trump administration to ameliorate the damage they have caused by their inauspicious rollout of tariff policy.” –4/11 Leadoff Morning Note “In our view, this past week represents the most transformational week in asset markets since the Lehman Bros. bankruptcy catalyzed nearly two decades of fiscal and monetary policy largesse. Geopolitically driven stress in the Treasury market is accelerating the transition from “US exceptionalism” to the US being an emerging market in capital flight risk terms. President Trump may be operating under the assumption that the US is “too big to fail” and foreign creditors may check him on that. Markets thought Lehman was “too big to fail” too. This transition has several profound implications for asset markets: 1) the rest of the world has much more negotiating leverage than anyone in the Trump administration is willing to admit publicly, increasing the probability that reciprocal tariff rates are broadly lowered in deals that President Trump will celebrate as “wins”, but are likely less effective than the Phase One China trade deal and USMCA he negotiated during his first term—we wouldn't be here today if the “art of the deal” actually worked back then; 2) incremental dysfunction in the Treasury market will force the Fed to expand its balance sheet in support of its financial stability mandate; 3) incremental dysfunction in the Treasury market will force regulators to accelerate financial repression as well (e.g., removing the SLR for Treasury securities); and 4) the Fed may be forced to HIKE rates during future recessions to attract capital to the Treasury market.” –4/12 Around the Horn “According to the White House, the exemption from the 145% China tariff and 10% global flat rate on consumer electronics is temporary and part of a longer-term plan, though the move signals Trump’s willingness to compromise and represents incremental confirmation of our view that the bond market activated the “Trump put” last week. China’s consistently firm tone indicates that it believes it has the upper hand in negotiations. At a minimum, President Xi’s historic consolidation of power means he will likely outlast President Trump’s second term. At a maximum, China understands and can weaponize the fact that the other side of a trade war is a capital war that the bloated US public sector can ill afford to lose.” –4/14 Leadoff Morning Note “Yesterday we asked if Trump was losing his own trade war. Thus far, the answer is “yes,” and the answer may remain “yes” at the end of the process for all the Fourth Turning polycrisis reasons we detailed in our 4/10 Leadoff Morning Note, 4/11 Leadoff Morning Note, and 4/12 Around the Horn webcast. The chronic combination of overconsumption by US households, overinvestment by US businesses, overspending by the US government, and undertaxing by the US government have left the US economy and asset markets in a very unresilient state amid mounting geopolitical headwinds. All told, the US’ net national savings rate is simply too low for President Trump to bully his way into the “US exceptionalism” his policies ended—at least temporarily. The US is simply too reliant on foreign capital to grow our economy. For example, the US’ twin-deficit current account and sovereign fiscal balances total -11 percent of GDP and is at an all-time low non-war, non-recession value amid foreigners owning 30% of outstanding marketable Treasury securities. To the extent President Trump is still serious about facilitating the Fourth Turning-style transition Paradigm A to Paradigm B, the only path forward is to accept that the transition will be painful and deal with it. The constant flip-flopping and lack of clear guidance is little more than a sign of US weakness in global capital war terms.” –4/15 Leadoff Morning Note Risk assets will likely retest the lows over the coming months as consensus GDP, sales, and earnings estimates are ratcheted down towards economic reality. If the US avoids an actual/NBER recession—and we think it will based on everything we can observe today across persistent leading indicators of the business cycle—that retest should hold or narrowly breach at worst. Investors would be remiss not to buy the likely retest dip because it is likely President Trump has already lost the trade/capital war he started and has pivoted to the pro-growth, pro-markets phase of his economic agenda as a result. Consensus actual/NBER recession probabilities are currently in the 40-50% range according to our analysis of anecdotal data and conversations with institutional investors. They will likely peak in the 65-75% range in response to weak economic data and company guidance in Q3 and trend back towards the standard 15% range by year-end. Please note this is a forecast based on everything we know today and we reserve the right to pivot based on new information—a right we’ve earned based on our world-beating track record in predicting and helping clients profit from this crisis with surgical precision since last fall. If you found this note helpful, please like and share. Thank you! Consistently making money and protecting gains in financial markets require a lot of time, expertise, and computational power. Investors partner with 42 Macro because we do the heavy lifting and answer the hard questions for them. See for yourself: 42macro.com/42-macro-sample-…. Have a great day! -Skipper

Good morning, and God bless, #Team42! Today’s Key Macro Question(s): Is the US heading into another emerging market-style crisis that forces the Fed to supply QE? The Nominal 30yr Treasury Yield briefly pierced 5% for the first time since November 2023 as investors questioned the haven status of US sovereign debt, sending the dollar lower for a second day and fueling fears that growing market volatility and stress may trigger a systemic break in financial plumbing. The Nominal 10yr Treasury Yield climbed 15bps to 4.44%, extending a week-to-date surge to 41bps, while the 30yr spiked 47bps week-to-date—its biggest three-day move since November 2020. The Treasury rout spilled into global bond markets, with the UK’s borrowing costs soaring to their highest level since 1998 and Japanese 40-year bond yields hitting an all-time high. Explanations for the selloff range from foreign investor liquidation of US debt to hedge funds unwinding over $1tn in basis trades to a broader reevaluation of US debt by global reserve managers. That it is likely all three is contributing to fresh speculation across global Wall Street that the Fed may need to step in to stabilize the bond market. Perversely, investors should welcome Treasury market dysfunction like this because it is the fastest route to the Fed supplying the QE asset markets require to curtail the worst of the global debt refinancing air pocket we have been warning about since last fall. Recall the Fed intervened in the Treasury market to the tune of $1.6tn in March 2020 during the COVID crisis. Indeed, this is the second such emerging market-style financial crisis the US has experienced in five years. There’s speculation that China is offloading Treasuries in response to tariffs, with some investors suggesting Beijing is reassessing its US debt holdings in light of Trump’s trade war. Such a move would undermine Treasuries’ safe-haven status, although official data show both China and Japan have been trimming holdings for years. The share of marketable Treasury securities owned by foreign central banks has declined from a peak of 40% in 2008 to only 13% currently. Investor anxiety in the Treasury market deepened following a weak three-year auction Tuesday, setting the stage for a nervous $39bn 10-year auction Wednesday and a 30-year sale Thursday. Investor anxiety is also being fanned by President Trump’s deepening trade war, which is contributing to concerns about the outlook for global inflation. While we do not view tariffs as inflationary, supply chain disruption that persists for years will certainly feel like inflation to consumers, businesses, and reported inflation data. Trump’s latest tariffs now push tariffs on Chinese goods as high as 104% and EU imports now face a 20% levy. “A major tariff” on pharmaceuticals is in the pipeline, according to Trump. US equity futures briefly turned green and Treasuries pared losses after China signaled openness to talks, though Beijing doubled down on its resolve to “fight to the end” and rebuked JD Vance for his “Chinese peasants” remark, leaving markets uneasy. This comes after markets whipsawed Tuesday, rallying as Trump teased South Korea negotiations, then sliding after his administration confirmed it would move forward with sweeping China tariffs. US Trade Representative Jamieson Greer told lawmakers: “We will have the president’s plan going into effect and we’re coupling that with immediate negotiations with our partners.” On Tuesday, Trump said he had a “great call” with South Korea’s interim leader Han Duck-soo and posted that “things are looking good,” as Seoul signaled it wants a “big trade deal”. Japan sent senior envoys to D.C. after Trump’s Monday call with Prime Minister Shigeru Ishiba. White House Trade and Manufacturing Czar Peter Navarro rejected claims that Trump’s tariffs are mere leverage, insisting they are core to a strategy to reassert US dominance, revive manufacturing, and extract geopolitical concessions. China remains defiant, vowing to “fight to the end,” and with Xi Jinping unlikely to engage in near-term talks, the trade war risk grows. Premier Li Qiang said China has “ample policy tools” to offset Trump’s tariffs. Other major economies are retaliating too. For example, Canada imposed a 25% counter-tariff on auto imports right after midnight, while France and Germany continue to push for a more aggressive EU response. @RayDalio warned markets are obsessing over tariffs and missing the bigger “once in a lifetime” realignment of monetary, political, and geopolitical systems. “There are big pressures for these imbalances to be corrected one way or another and doing so will change the monetary order in major ways,” Dalio wrote, adding that “it is obviously incongruous to have both large trade imbalances and large capital imbalances in a deglobalizing world in which the major players can’t trust that the other major players won’t cut them off from the items they need (which is an American worry) or pay them the money they are owed (which is a Chinese worry).” We view the current meltdown in the Treasury market as part and parcel of the Fourth Turning polycrisis that we have been preparing 42 Macro clients for since the summer of 2023 when we first debuted our Investing During A Fourth Turning Regime presentation. One of the key takeaways from the presentation is our structural bearish bias on Treasury bonds and expectation that the US would have a cascading series of EM-style financial crises that require greater and greater monetary debasement and financial repression by the Fed to calm Treasury market dysfunction. Ultimately, the Fed will be forced to go to unprecedented lengths to plug the growing, geopolitically driven supply-demand imbalance in the Treasury bond market once the world deems the US to be in fiscal crisis—an outcome we still anticipate by 2030. I get chills when I think about the impact such a great monetary inflation would have on the poorest members of our society—i.e., the people I grew up with. That is why I am so passionate about helping investors and ordinary people prepare for these global macro risks. We put this deeply researched view into action when we pivoted our systematic KISS Portfolio Construction Process permanently out of Treasuries and into Gold last fall. We currently feature that Oct-24 Around the Horn presentation on our Sample 42 Macro Research page: 42macro.com/42-macro-sample-…. You can preview our “US fiscal crisis by 2030” thesis here: teapawt.net/dariusdale42/status/18…. We provided a detailed update regarding this deeply researched view on slides 56-84 in our Apr-25 Macro Scouting Report presentation last Friday when the 10yr Nominal Treasury Yield closed below 4%. Although @42Macro currently advises a collection of systemically important buy side clients whose cumulative AUM is well north of $25 trillion, any investor in the world can access this content via our Macro Strategist or Macro Strategist Pro subscriptions here: 42macro.com/research. We price our top-tier Wall Street research so that every investor on Main Street has a chance to compete for returns too. Social mobility is very important to me as someone that grew up living exclusively in public housing, homeless shelters, and the occasional automobile. Please like AND repost this note if you support my mission to truly democratize the best of Wall Street. Elsewhere, Delta $DAL scrapped its full-year guidance amid global trade uncertainty, with CEO Ed Bastian warning that revenue has “flat-lined” and lamenting, “It’s very difficult to predict what policies may look like over the course of the year.” Expect many companies to pull guidance during Q1 earnings season due to “uncertainty”—whatever the heck that means. Review what we wrote yesterday for details on why this cowardly act prolongs bear markets. If you found this note helpful, please like and share. Thank you! Consistently making money and protecting gains in financial markets require a lot of time, expertise, and computational power. Investors partner with 42 Macro because we do the heavy lifting and answer the hard questions for them. See for yourself: 42macro.com/42-macro-sample-…. Have a great day! -Skipper

Good morning, and God bless, #Team42! Today’s Key Macro Question(s): Will reciprocal #tariffs clear the way for new highs in risk assets? Likely. After our Mar-a-Lago Accord note yesterday, the U.S. Dollar Index $DXY staged a sharp intraday reversal that contributed to its largest decline in three weeks. The DXY is now down -3% from its 52-week high on January 13. Why is the U.S. #dollar declining despite yet another executive order on tariffs? To start, we believe the reciprocal tariffs strategy that President Trump has chosen is less likely to be viewed as an unfair trade policy by the U.S.’ trading partners. The U.S. retaining its ability to communicate, “Hey, we are not doing anything to you that you are not doing to us,” increases the odds that we see tariff rates mutually lowered in some cases. Lower tariff rates represent less upside risk for the U.S. dollar because it reduces pressure for the U.S.’ trading partners to devalue their currencies to maintain competitiveness in response to fresh tariffs. Secondly, President Trump’s reciprocal tariffs strategy also reduces the odds of key trading partners like China and the EU pursuing a strategy of offsetting currency devaluation. Put differently, a country devaluing its currency to offset well-branded reciprocal tariffs would clearly signal its intent to maintain the old world order of unfair trading practices that benefit its industries at the expense of American workers. In signing the executive order for reciprocal tariffs, President Trump promised many things to the American public, most notably more jobs and lower prices. We can debate whether there is enough labor supply in the U.S. to support an influx of manufacturing jobs—or whether manufacturing costs in the U.S. are low enough to be economically viable even with reciprocal tariffs in place. We can also debate whether the advent of new trade frictions will lead to lower prices—after all, not every country will be incentivized to negotiate every pre-existing tariff to 0% to avoid reciprocal tariffs. On a net basis, U.S. tariff barriers will most assuredly rise after the April 1 deadline for the Commerce Department's study on trade and currency manipulation. What we cannot debate is the impact President Trump’s clever reciprocal tariffs strategy is already having on asset markets. In yesterday’s Mar-a-Lago Accord note, we wrote: “All told, there is an undeniable, broad-based down-dollar trade going on that is being funded by rotational flows from U.S. stocks and the crypto market. That is exactly what you would not expect amid President Trump’s “America first” policy platform and his promise to make the U.S.A the “crypto capital of the planet” according to his recent executive order. Could President Trump be using his chaotic tariff threats as leverage to force key trading partners and economic rivals alike to negotiate his version of the Plaza Accord? We cannot rule out a globally coordinated decline in the U.S. dollar given President Trump’s desire to eliminate U.S. trade imbalances by reshoring manufacturing and eliminating U.S. reliance on foreign adversaries for strategically important goods. Global equities and precious metals suggest you should add a potential Mar-a-Lago Accord to your 2025 BINGO card.” While reciprocal tariffs reduce the probability of a too-strong U.S. dollar and an eventual Mar-a-Lago Accord, they do clear the way for the U.S. dollar to continue its nascent descent. Have we seen peak dollar? Perhaps—especially if we are right in our anticipation of a ~$500bn reduction in the Treasury General Account (TGA) balance in the coming months. A declining dollar is an explicitly bullish dynamic for global liquidity. Our Global Liquidity Monitor is already projecting a modest increase in global liquidity over the medium term. A fresh bearish trend in the U.S. dollar would amplify that projection, turning a modest increase in global liquidity into a significant one that reduces the probability of a global refinancing air pocket this summer. We shall see… If you found this note helpful, please like and repost. Thank you! Consistently making money and protecting gains in financial markets require a lot of time, expertise, and computational power. Investors partner with 42 Macro because we do the heavy lifting and answer the hard questions for them. See for yourself: 42macro.com/42-macro-sample-…. Have a great day! -Skipper