Joining us yesterday on Talking Markets for the first time was
, CIO of Unlimited Funds, PM of $HFGM & $HFND, author of the Nonconsensus Substack, and straight-shooting macro thinker📝Bob trades from a macro perspective with a time horizon of about 3-6 months.
Of course, with the news yesterday, we had to first talk about…
…The Fed
The reports that President Trump had drafted a letter to fire Fed Chair Jerome Powell was “the shortest TACO (Trump Always Chickens Out) trade of the year,” Bob said. “We’ve had some short TACO trades but this one takes the cake - I think it was 45 minutes before it was recanted.”
Still, Bob said, “we have to recognize that there is a non-zero possibility that the administration will make an effort to engage in meaningful political influence on the Fed, including firing the Chairman.” However, Jay Powell is just one vote on a board of 12+, “so if President Trump is really committed to ensuring he gets his way as far as monetary policy goes, he’s going to have to do a lot more than just fire Powell from the chairman’s seat in order to get what he needs,” Bob said.
The $64 million dollar question, for Bob, is this:
“Does he have the political fortitude to be able to go through that whole process to get his goal, or is this mostly just political maneuvering, knowing that his policies are growth negative, the economy is slowing down, and he’s going to need somebody to blame it on ahead of the midterm?”
If it were to happen, Bob says we would primarily see the impact in the dollar, gold, maybe bitcoin, and a little but in bond prices.
💡“That’s why the vast majority of investors are totally underweight gold,” he said. “If ever there was a time to be holding gold, now is the time.”
Is the Fed Wrong to Do Nothing?
“The Fed looks at core PCE inflation and the unemployment rate, and any Taylor Rule model would say that at 4.1% unemployment and core PCE that’s at roughly 3%, that the Fed should leave interest rates where they are right now,” said Bob. “So in that sense, a Fed that’s focused on being data driven should do nothing, and they’ve done nothing. That set of choices is consistent with the data.”
However, Bob thinks that “when you look at the economy as a whole, the conditions are a lot weaker than the stance being presented by the Fed.”
Household consumption (a.k.a. real PCE) “has been negative in 2025,” and the “US economy is a consumer economy,” Bob said. “The consumer is in a tough position.”
Softening labor markets with a wage growth number of about 3% nominal, and an environment with 3% inflation, “leads to 0% real growth and demand.”
The Great Rotation
Regardless of what happens with the Fed, Bob says that US government financing has been “incredibly reliant” on foreigners: “Foreign private sector investors, like European and Japanese pension funds, etc, have been some of the biggest buyers of Treasury duration,” he said. “In fiscal year 2024, foreign private investors bought 100% of the duration issuance of the US. It’s been a little bit less this year, but not that much less.”
So, they are “pretty radically overweight US bonds and US assets in general,” Bob said. “The real question is what they intend to do - and my guess is we’re going to see a slow but sure recognition that being massively overweight US assets, either on the equity side or the bond side, doesn’t really make sense. Investment mandates will be shifted.”
💡“We had 15 years of basically straight up dollar strength, and more likely than not, we’re probably transitioning to a period of 15 years of dollar weakness relative to other developed currencies,” Bob said.
The “Season of Disappointment”
Over the past couple of weeks the market has started to feel “soggy,” Bob said. “It’s been very hard to get this equity market to move meaningfully higher after the short-term euphoria after the big beautiful bill.
The biggest and most reliable driver of equities over time - in a 6-12 month time frame - is “basically how growth comes in relative to expectations,” Bob said. “When I look at that, [there are] very strong expectations, and when you look at the real economy, we’re pretty close to putting up a zero when it comes to end demand. Everyone is bulled up on the US economy and US stocks, and I think they’re going to be disappointed. Maybe it’s not in the second quarter, maybe it’s in the third quarter.”
💡In this environment, Bob thinks “bonds relative to cash are positioned to do pretty well… In an environment where there is likely to be a significant growth slowdown - or there already has been but it’s not yet reflected in markets - bonds are my go-to trade.”
💡💡 A challenge to the bond trade is if there is a “loss of faith in the US financial system,” but that can be mitigated by a) holding gold with bonds, and b) holding those long positions relative to stocks.
Bob On…
Bitcoin
“I’m a casual observer of Bitcoin… During the April turmoil, Bitcoin went down a lot and recovered to all time highs, but recovered in a way that looked lagged to the S&P 500. So, maybe at some point it’ll be like digital gold but none of the empirics suggest that it’s trading like that. It could be a fine asset if people want a more highly levered risky asset, but recognize you’re not getting something unique. You’re getting more volatility of risky assets than anything.”
How Hedge Funds are Positioned
In Unlimited Funds’ ETFs, “we replicate how hedge funds are positioned,” Bob says. “We have technology that allows us to understand how they’re positioned in real time, and we put that into an ETF wrapper. Global Macro ($HFGM), is one of the most telling. You can see that macro managers are [currently] long bonds as their largest risk position, and long gold; and when it comes to risky/pro-growth assets, they hold a significant position in high yield debt and foreign stocks, relative to pretty modest holdings in US stocks.”
Home Bias
Capital leaving the US will mostly return home, Bob thinks. “At one point last year, the US was essentially getting like 70-75 cents of every incremental dollar that went into global financial assts,” he said. “That is crazy. [The home bias shift will be] enough to be supportive to foreign stocks and foreign equity markets relative to the US.”
Enjoy,
Maggie
Important Disclaimer: It is crucial to remember that this article is for informational purposes only and should not be considered investment advice. Consult with a qualified financial advisor to assess your risk tolerance, investment goals, and overall financial plan.
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