Nikkei’s Washington Bureau Chief, Takeshi Kawanami, wrote an interesting preview of tomorrow’s talks between US Treasury Secretary Scott Bessent and USTR Jamieson Greer and Japan’s Minister of Economic Revitalization, Ryosei Akazawa, in Washington DC.
On Wednesday, April 16, Japan’s Minister for Economic Revitalization, Ryosei Akazawa, will meet with US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer to discuss tariffs and trade policy. Akazawa is a close associate of Prime Minister Shigeru Ishiba.
Our intention is not to get hyperbolic, but by applying 104% tariffs on Chinese imports, the US has essentially declared economic war.
With talk of 1987-style crashes circulating in the market (we hope not), we want to focus on some charts we have flagged over the last few weeks, which you need to have on your radar.
Occasionally, whenever we feel masochistic, we turn on CNBC to get a sense of how Wall Street’s cheerleaders are feeling, and obviously, after the election, their mood was utterly effusive! Yet, over the last couple of months, as stocks have weakened and they have woken up to the reality of the Trump agenda, the tone has followed the classic stages of grief: from disbelief to anger and, this week, sadness.
We’ve received several client questions asking if recent events have changed our structurally bearish stance on Treasuries. The short answer is no. However, we have always maintained that in the event of a US recession, we’d expect 10-year Treasury yields to fall to 3%, i.e. the bottom of the + 1SD band around our demographic model, which is a nice tradable move.
A couple of days ago, we sent you a few thoughts ahead of the day’s tariff announcement (“Liberation Day: Some Thoughts” 31st March). In the piece, we said that we expect the dollar to move materially lower if and when foreigners sell or FX hedge their US assets.
As we head into Liberation Day, we held a call to share some of our thoughts on the nature and consequences of the tariff announcement. Plus, answer some client questions.
Despite all the comments from the Administration, investors, especially here in the US, refuse to accept the “reality” that we are at a historical crossroads. Hence, as we approach Liberation Day, we wanted to offer some thoughts.