Attack the Week (ATW)
April 13, 2025
Sunday Thoughts
Today, we will see a full moon known as the "Pink Moon." Despite its name, the moon does not appear pink; the term originates from the blooming of pink wildflowers in early spring. This full moon is also a "micro moon," meaning it occurs when the moon is at its farthest point from Earth in its orbit (apogee), making it appear slightly smaller and dimmer than usual.
The full moon is visible from every point on Earth at different times because of how the Earth, Moon, and Sun align. During a full moon, the Earth is between the Sun and the Moon, which means the side of the Moon facing Earth is fully illuminated by the Sun. Since the Earth is spherical (sorry, flat-earthers), people worldwide can see the full moon at various times, depending on their location. While the exact angle and time you visit the full moon may vary based on your position on the planet, everyone will eventually get to view it at some point as the Earth rotates.
This idea of seeing the same object from different vantage points can be a beneficial exercise in understanding complex problems. The linearity of one’s mind and view of the world can often be warped into myopic thinking. Seeing anything through different people’s eyes compounds one’s view’s effectiveness. I call it "mosaic theory", where I frequently check my network of finance people and check what they are seeing and thinking. Currently, and not surprisingly, my network is confused. Some of them are actively trading, while others are holding their fort. Nobody likes politics, and it’s usually a sideshow, but when politics start dabbling in finance, that’s where stupid things happen. Ask anyone who has ever traded emerging markets.
The recent flight out of US assets showcases that the mighty Dollar reserve currency might not be immune to these developments. Safe assets elsewhere are now being chased. The Swiss 2-year is now in negative territory again as the sharply appreciating CHF is increasing the probability of SNB slashing rates back to negative territory. Hello, darkness, my old friend.
Trump’s renewed u-turn on tech companies draws a crazy week into a farce. Isn’t he meant to look after the small guys? A call from Tim Apple probably did the trick. What about all the smaller US companies that produce in China? Is that really good news?
The broker crowd is already getting excited about the prospects of another US equity pump, and there were clearly some indications as of Friday’s close that the word has gotten out. Monday might see another rally, but what signal does this adjusting policy making send? Non-seriousness is a word that comes to mind.
Calling on my mosaic approach, I have been tracking the work of
, which is worth following. I’m not in agreement with his views, but that’s precisely why I read his thoughts. He believes that Trump is pretty much done here and that equity markets will dismiss his actions and move on. This might be true for equity markets, but what about bonds and the Dollar? Will international investors stop divesting from the holdings based on his flip-flopping? I doubt that. To me, the Dollar continues to be a sell, and yield curves should continue to steepen.Another interesting development is the question of the impact a stagflationary environment will have. A good friend and equity analyst sent me a recent company sales report, which made the stock plunge. There are some interesting read-throughs, possibly for what’s to come for other corporates. I will discuss this further behind the paywall.
Subscribers have been sent my macro blueprint at the end of March, which entailed the following investment implications.
The US Dollar continues to weaken
US Stocks on an index level will likely re-rate lower
I don’t call the end of US exceptionalism. For it to end, you need an alternative. I don’t see exceptionalism elsewhere. US companies are still the best in the world.
Rotation might continue, but the bulk of non-US equity outperformance is behind us
Lower trade deficits and still elevated budget deficits mean steeper US yield curves
Inflationary pressures might persist in the short-to-medium term. US Treasuries might not offer you the same diversification in a stagflationary environment unless we enter a recession
Real assets, like precious metals, should continue to do relatively well
Stay nimble; markets are going to be volatile
One subscriber rightly challenged me on the third bullet point. You don’t need an alternative for exceptionalism to end. I agree. Yet, history is littered with examples of exceptionalism losing its credibility; it often requires an external or internal challenge that either questions the foundational assumptions of this belief or presents a contrasting viewpoint. You could argue that the US is indeed in the middle of this internal and external reassessment.
A reminder that I am currently running a month-long discount on becoming a subscriber in this growing space. The price lock is for life. Consider it a stagflationary hedge.
Let’s also read Macro D’s latest thinking before briefly scanning the week’s upcoming calendar. We then revisit some charts, which give us some interesting setups. As always, we close with a look at the output of our asset allocation model.
Have a successful week ahead. And remember, stay nimble.