For investors, US risk assets are a no-go
Trump and Team have a clear plan for Macro Catharsis
Here's why it's smart (but also risky)
-short-term pain for long-term gain
--get painful reforms like fiscal cuts front-loaded
--unwind excesses like overvalued/overhyped stockmarket
--face the music on the macro cycle early on in the term (and blame it all on Biden)
-bounce back into boom for next elections
At the same time it gets rates lower, dollar lower, which makes US firms more competitive (and pairs with the tariff and reshoring aspects); so it may help with US industrial revival.
The risks
-when you haven't had a proper recession in 15-years it could expose a bunch of vulnerabilities (crisis risk)
-the unwind can be a bit unwindier than expected (get more than you bargained for on the reset front)
-potential long-term damage to risk taking appetite if focus turns to loss aversion vs greed
For investors, US risk assets are a no-go.
-policy uncertainty, recession risk
-extreme expensive valuations
-better risk/reward elsewhere
This is probably the one chart that shows how risky this can be, and why investors need to "have a hmm"
2009 was a gift for long-term investors, set the scene for a golden decade and a half for US assets
2025 is the opposite $S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ $NASDAQ 100(NDX)$ $Invesco QQQ(QQQ)$ $DJIA(.DJI)$
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