Macro Memo: Running Hot

The UpshotIn this piece, we will cover:US Macro Reacceleration:AI productivity outweighs job cutsPro-growth policy and fiscal impulse ahead of midtermsLiquidity injections alleviate funding pressuresPowell claps backGlobal Instability Breeds Opportunity:Long oil & tankersDon-roe Doctrine winnersChina’s long march towards recoveryAnd of course… Our New Macro TradesUS Macro: Running HotWe find few reasons to be bearish on the US economy. The two biggest concerns of 2025 (tariffs and job creation) haven’t led to a broader slowdown. Rather, consumption and overall GDP data is accelerating, and while the labor market is stagnant, the floor remains intact. Productivity gains, in part driven by AI, are likely to increase.Meanwhile, the political pressure of midterm elections is already apparent in the White House, as Trump refocuses his attention towards everyday consumer concerns – inflation (oil supply), housing affordability (MBS buying), consumer credit (interest rate caps)-- even teasing direct stimulus checks.With 16 months passing since the first rate cut of this cycle in August 2024, perhaps we are beginning to see the “long-and-lagging” effects of bullish monetary policy beginning to materialize.

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