TRUMP & US $7 TRILLION PROBLEM

7 Mac

The US has a BIG problem…the new President? NO, something even bigger!

They have to pay off $7 TRILLION worth of debt in the next 6 months
The thing is, the US doesn’t have a spare seven trillion to drop (they spent it all)

So what’re they going to do? Refinance (aka: take out another loan, to pay off the old loan)

Problem is, when they took the initial $7T loan back during the COVID era, rates were at zero and right now, they’re comfortably above 4% which means the US government needs to get rates down ASAP (or risk getting slapped with even crazier debt repayments in the future)

The issue? The USA economy has been too strong. A strong dollar and a strong economy means no way to lower rates…especially if inflation is rising…so what’s a quick way to get rates down? A good old fashioned growth scare.(‘Cause if everyone thinks the US is going to stop growing, they’ll pull their money out of the economy, weaken the dollar and thus, tank rates)

One way to stir up a growth scare might be to:

Have Trump announce tariffs that will slow down trade

Set Elon Musk loose on thousands of government jobs

Have a very chaotic argument with Zelensky (Ukraine president), stoking fears of further global unrest .If this is Trump’s plan…it seems to be working so far

Here are some charts that double as a measure of the US economy’s strength
a weaker economy leads to lower rates

1/ The 10 year yield: down

Over the past ~2 months, 10 year yields have fallen from 4.79% to 4.22% (but still have a way to go )



2/ The DXY (which tracks the value of the US dollar): down

and down quite rapidly – the DXY has seen its sharpest 2 day decline since July 2023.

3/ Truflation: down

Truflation tracks inflation in real-time (as opposed to the CPI, which is a lagging indicator). Less economic activity/growth = less room for producers to hike prices.



Now – lettuce be very clear:

This whole ‘Trump is tanking the economy to refinance at a better rate’ theory is exactly that: a theory. Totally unproven.

Trump could be an idiot with no grasp on basic economics, or he could be playing 4D chess.

Or maybe it sits somewhere in the middle – where he ain’t too bright, but he has giga-brained people on his team that are playing 4D chess on his behalf…

Either way, the US needs rates to go down in order to refinance.

And the good news is: most of the potential tactics we laid out (tariffs, Zelensky, DOGE) are all largely within the control of the US government.

So the ‘short term pain for long term gain’ scenario, in which:

The US economy dips in the short term → the government refinances → then axes tariffs, makes peace w/ Zelensky, and slows DOGE’s firing spree, in order to pump the economy (all while pushing its debt obligations forward a decade)?



That’s a real possibility

Again, none of it is set in stone but if you’ve been wondering “what is with this sh*t show of a government?? The madness never seems to end”

This is a potential answer.

Will it work? No idea – we hope so! Because if it does, it means:

Things aren’t as bad as they seem
Markets will rocket from here

what do you think fellas?

12 Mac

Dagangan aktif

Financial markets have faced sustained pressure in recent sessions amid escalating trade tensions, with additional tariffs set to be announced on April 2. The latest 25% tariffs on steel and aluminum imports imposed by the Trump administration have prompted a swift response from the European Union, which plans to implement €26 billion (£22 billion) in retaliatory tariffs on U.S. goods. These measures will be partially rolled out on April 1 and fully enforced by April 13.

Volatility has surged, with the VIX spiking to 28 before settling at 26.6, underscoring heightened market uncertainty. Notably, the Cboe Exchange’s VIX term structure has shifted into backwardation, which may indicate that the market has found a near-term floor, with limited catalysts for further downside. Historically, such patterns have often preceded a rebound in the S&P 500, suggesting that despite current instability, conditions may be setting up for a recovery.

Attention now turns to the upcoming CPI release, which is expected to play a pivotal role in shaping market sentiment. Following last week’s weaker-than-expected NFP report, markets have adjusted expectations to reflect four rate cuts this year, up from just one in January. However, January’s stronger-than-anticipated CPI print has introduced uncertainty into the disinflation narrative, keeping investor sentiment cautious. The upcoming CPI data will be key in determining whether inflationary pressures persist or if disinflationary momentum can be sustained, with potential implications for near-term market volatility.

27 Mac

Dagangan ditutup: sasaran tercapai

President Trump escalated tensions overnight, announcing a 25% tariff on automobile imports, effective from 3rd April, alongside the long-anticipated reciprocal tariffs against US' largest trade partners. Any further retaliation from these target economies risks injecting a fresh wave of uncertainty into an already volatile global trade landscape. Predictably, Japanese and South Korean equities traded in the red, with automobile stocks bearing the brunt of this leg down.

In crypto markets, sentiment remains subdued despite headline-grabbing catalysts. GME's surprise $1.3bn capital raise for Bitcoin allocation has yet to lift broader sentiment. The only silver lining is the steady inflow for BTC ETFs, totalling $944.9m since the 14Mar25 expiry. In contrast, ETH ETFs have recorded $112.1m in outflows over the same period. This presents a telling divergence that reflects the market's bifurcated institutional conviction.

On-chain developments offer some hope for ETH. With Pectra now successfully deployed on the Hoodi testnet and a mainnet upgrade expected in Q2, could we see a reversal of this downward ETHBTC trend in the coming quarter?

Looking ahead to tomorrows expiry, $12.2bn worth of BTC options will expire with max pain at $85,000. BTC has already begun grinding lower from Monday's highs, and both BTC and ETH front-end vols have collapsed by 10 vols. Spot is trading sideways and OI continues to bleed lower, signalling a broad lack of near-term optimism in the market. With the PCE Index data due tomorrow, we believe any short-term upside remains capped as markets wait for clarity from Trump's next move in this escalating trade war.