Germany : HUGE fiscal, EURO up, Bund / China stimulus / Trump 'mulling' tariffs compromise / UKR mineral deal ..

Stéphan

Mar 53 min read

The German fiscal package is massive (10-20% GDP). - 500 billion 10Y fund for public investment - All defence spending above 1% of GDP not counted for debt brake. - Federal states can borrow 0.35% p.y. for investment. Germany is back - economically +militarily >>> Imagine if the US announced a $5+ trillion fiscal injection and told you they stand ready to do “as much as it takes” on top. That’s what Germany just announced (in % of GDP) >>> Merz 'whatever it takes' moment, biggest long-end move in Germany since 1998 !! ..thus EURO follows higher, copper much higher, huge fiscal response globally #Duration !
China targets ‘around 5%’ growth in 2025 and lays out stimulus measures as trade worries mount
Trump is mulling #Canada, #Mexico tariff compromise, Lutnick said last night, if so this was the shortest trade war in history.. >>> did Trump blink as SPX approached the 200dma around 5800 ?..we shall see
#duration : big picture, it is hard to be too bullish duration with Trumpism forcing HUGE spending across the globe, term and inflation increases and will weith on th elong-end eventually + a huge $7trm refinancing in the U.S this year alone is coming (which is why Bessent pushed this view initially...)
Tariffs implemented today are just the start of suite of planned levies that would bring US tariffs to above the Smoot-Hawley days in just a few weeks. Even with modest retaliation by trade partners, these policies are shaping up to slice 2% off US real growth >>> mild recession, FED cuts, yields down, usd down (better for manufacturing kick) etc...
Trump urged lawmakers to eliminate the Chips Act and said he would not give chipmakers any more funds from the law
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BESSENT: “Over the medium term, which is what we’re focused on, it’s a focus on Main Street. Wall Street’s done great, Wall Street can continue to do fine, but we have a focus on small business and consumers. We are going to rebalance the economy.” Short-term pain is their plan
Dollar risks losing safe haven status, says Deutsche Bank
France eyes taxes on the rich, not companies, to help fund defense
Gary Black : Yeah, I voted for Trump but I never thought he’d be so foolish to actually move forward with 25% tariffs given the well-documented history of how the Smoot-Hawley Tariff Act of 1930 triggered the onset of the Great Depression as global trade flows dried up
Putin Agrees To Help Trump Broker Nuclear Talks With Iran - BBG
Ending the Ukraine War: A Reset in U.S.-Russia Relations? | Andrea Kendall-Taylor & Michael Kofman / great podcast below