Keep pulling the thread on Felix Jauvin & Quinn Thompson.
The Federal Reserve cut interest rates by 100 basis points over consecutive meetings in the fall of 2024, which powered asset prices to all-time highs by late December.
In mid-December 2024, the Federal Reserve shifted its policy stance from proactive to intentionally reactive and slow to respond to economic data.
The effective tariff rate from the Trump administration's "Liberation Day" policy announcement was calculated to be around 30%.
The Trump administration is willing to accept short-term negative impacts on risk asset markets to achieve long-term goals like balancing the budget and reshoring critical supply chains from China.
A primary economic goal of Scott Bessent and the Trump administration is to lower the 10-year US Treasury yield.
Taiwan produces 60% of all semiconductors globally and over 90% of the most advanced chips.
A potential risk for the US is a "Liz Truss moment," where fiscal concerns cause the bond market to revolt, forcing the Bank of England to intervene with quantitative easing.
Quinn Thompson predicts that if China were to invade Taiwan, Nvidia's stock could fall by 60% and the S&P 500 could fall by 30% in a single day.
The spread between the Secured Overnight Financing Rate (SOFR) and Interest on Reserve Balances (IORB) recently turned positive on a non-quarter-end date for the first time, signaling unusual strain in funding markets.
Felix Jauvin asserts that for Bitcoin to surpass its all-time high, it would require a failure of the Trump administration's economic policies, leading to increased deficits and quantitative easing.
At the beginning of 2025, the equity market's forward price-to-earnings ratio was at the same high levels seen in 2021.
Forward earnings estimates at the start of 2025 projected year-over-year growth matching the period of the Trump administration's major tax cuts.