Hi everyone,
We have a special episode of Talking Markets for you today to round out the week.
Yesterday I sat down with Daniel Lacalle, investment manager, author and founder of Alpha Strategy Consulting.
It was a super interesting chat, with a lot of takes you won’t see many other places. Some of what we got into:
The “Mirage” of the Past Two Decades: Daniel says the global order of the last 10-20 years was a “mirage” where nations were falsely believed to share the same objectives and policies. He views the current world, with two major economies (US and China) with different objectives, as “actually less dangerous” because it acknowledges this reality, unlike the prior elite-driven “big summit driven multilateral type of approach.”
Tariffs Do Not Cause Inflation(?!): Daniel says tariffs don’t cause inflation because they do not add more currency to the system and are absorbed by “overcapacity” in global supply chains. The only way tariffs would cause inflation would be if goods were “produced 100% abroad and had inelastic demand.”
Optimism for the US Economy: Daniel is “very optimistic about the US economy," highlighting its incredible dynamism, innovation, and entrepreneurial spirit. He sees elements of the bill, such as “deregulation, tax cuts,” as positive “supply side measures.”
The Unseen Crisis for Global Debt: Sovereign Bond Markets at Risk: Daniel thinks the “biggest risk” in the new economic order as the disappearance of developed economies' debt as a global reserve asset. This shift is driven by central banks increasingly moving towards alternatives like gold and Bitcoin. He said that “digital innovation doesn't kill fiat currencies, it kills the government bond markets, the sovereign bond markets,” because the design of new digital currencies, such as the proposed digital euro, makes them “fungible and programmable” and able to “disappear out of thin air.”
Lots more in the interview… Let us know what you think…!
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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