Why Cross-Border Flows Matter More Than Rate Cuts | Capital Flows
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You know, the Fed has been a little bit hawkish, causing a little bit of adjustment for the far end of the risk curve. But in terms of a recession or something like that, that's not really on the table. The stance that I'm taking now is that you gotta pick your spots a lot more now, and you gotta be real specific about which spots that you're taking longs or shorts in. I think the biggest factor to get right right now is how public market liquidity is shifting due to cross border flows and trade. I think that's even more important than the Fed.
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Totally. I appreciate it. It's been fun to have the journey, and I've appreciated, you know, you guys, you know, supporting me and everything that you guys have been doing. And it's it's like you're just saying, it's cool to see the entire space and everything grow and you get to meet a lot of really cool people along the way. So it's been a blast.
Yeah. A 100%, man. Alright. Well, let's yeah. Let's catch up on macro. You I feel like you really are banging the drum on this narrative for the past few months of how credit and credit growth is really driving things. I'm curious, first off, if you could just walk us through, like, was that framework like for the past few months and where does that net out with where you stand on global macro today?
One of the main ideas that I've had over the last year coming out of the drawdown for Q1, right? The whole idea was the tariffs were the primary cause of the drawdown. It was primarily the entire setup where you have the dollar sell off, equity sell off, gold rally, bonds bid. And then as that was kind of being the entire tariff thing being priced in, we were rejecting the lows on additional tariff news. The question that I was kind of looking at was, okay, we're at these lows in equities. How aggressively is the Fed going to cut into that rest of the year and how are commercial banks issuing
I wanna double click on the credit thing for a second because I'm always interested in how people quantify the drivers of credit growth or credit creation because I've heard one you know, if you if you look at, like, quantifying a fiscal impulse or monetary impulse, it's quite easy to look at what are the key drivers of that. It's like, all right, know, Fed cut rates or whatever's going on the balance sheet. It's quite obvious to see the sequential impact and same with fiscal flows, right? Like if you are widening the fiscal deficit or you're, you're doing this huge, like, big Buford bill or o
I think that's really important because I think there's, a lot of, you know, liquidity stuff talked about. But then Yeah. When it comes to, like, the underlying economy, everyone's kinda like, oh, we'll see what happens. Right? And at least kind of look at growth. Right? So if you go to the slide where you have Goldman Sachs, US equities with high floating rate debt and the two year real yield, think I that kind of shows a little bit, but I'll explain a little bit the process I have. Basicall
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