This is an audio transcript of the Unhedged podcast episode: ‘Sell America?’
Katie Martin
Oh America, what have you done? It’s all going wrong over in markets. I’m not quite sure where to start here, but stocks have been taking a beating, led by US national champions in Big Tech. The dollar is wobbling, even though inflation is widely expected to kick higher. So much for the dollar’s haven status. US government bonds, pretty much the same deal: no likey. The latest thing adding fuel to the fire is of course Mr Donald J Trump really cranking up the heat on head of the central bank, Jay Powell. None of this is good. So today on the show, we’re asking, is the sell America trade on? Can anything turn this around?
[MUSIC PLAYING]
This is Unhedged, the markets and finance podcast from the Financial Times and our friends at Pushkin. I’m Katie Martin, a markets columnist at the FT in London, fresh from a four-day weekend spent gardening, climbing, and doing as little else as possible. I’m joined down the line from New York City by two sacrificial Americans — stooges for us to laugh and point at. That talented young man, Aiden Reiter, is back in the house, joined by the big man, Rob Armstrong, who’s back from some time out in the sunshine. He is apparently tanned and rested. Rob, Santa Fe, I hear.
Robert Armstrong
Santa Fe, adobe and turquoise. That is what that’s like. Even the McDonald’s is adobe in Santa Fe. It’s incredible. And like every . . . My son looked around and he’s like, every store in this town is the same. And he’s exactly right. If you wanna buy anything besides turquoise jewellery, cowboy hats and cowboy boots, you are out of luck in Santa Fe.
Katie Martin
What’s the food? What’s the vibe?
Robert Armstrong
The food is great. It’s southwestern food and Mexican food. You know, it’s at 6,000 feet so the air is bright and clear. The mountains are surrounding you and they’re beautiful. I mean, it’s a cool place.
Aiden Reiter
Did you get your food all Christmas-style?
Robert Armstrong
Yeah, exactly. The red salsa and the green salsa. Christmas-style is what they call it. It’s really good, yeah.
Katie Martin
Well, look, it sounds lovely, but I’m not going and you know why? ’Cause I don’t wanna end up in a detention centre in Louisiana ’cause some random immigration official doesn’t like my resting journalist face.
Robert Armstrong
Yeah. Louisiana is very nice, but I don’t know about its detention centres.
Katie Martin
This is one of the problems that the States has got here, right? Nobody in their right mind wants to go there any more. I mean, tourism numbers are collapsing from overseas. It’s . . . the Canadians in particular, of course — some serious beef with you guys, and they don’t wanna visit.
Robert Armstrong
Well, I’m gonna come on this show and be the optimistic one. I am gonna say mistakes have been made, to use the first George Bush’s passive voice locution, but the damage can be repaired if we change course.
Aiden Reiter
And also I’ll say I was just in Miami and I saw a lot of Canadians. So they’re still coming.
Robert Armstrong
Right on. But maybe we should talk about the damage. What is the damage? What’s the latest on that?
Katie Martin
Well, luckily for you, I’ve written down some numbers about the damage. S&P 500 down 12 per cent so far this year. Now I will note, and I wrote about this the other day, it’s up quite a lot from the very low point of that “liberation day” week when Trump announced the tariffs. So if you were lucky or skilful enough to call the bottom there, then congratulations, but personally, I don’t see it lasting. Nasdaq down 18 per cent, so anything sort of tech-flavoured is getting particularly hard hit.
Now one of the reasons why this is particularly bad for you guys is meanwhile, even UK stocks are up a bit and the Dax in Germany is up 7 per cent, or 17 in dollars. I could go on. The euro’s up at 1.15, so like $1.15 — big jump in the euro, big drop in the dollar. Gold up at $3,500.
Robert Armstrong
I think gold is the most important indicator here because, as I’ve said before, I think gold is just the flip side of fear, right? I don’t think . . . It’s not an inflation hedge, it’s not an asset. I don’t care about its industrial uses. It is stupid, but it is the thing you buy when you’re scared. It’s like even when the other not scary stuff is not not scary enough, you buy gold. And gold at $3,500, for those of you who don’t follow that price, is bananas. Like back when it crossed $2,100, people were like, oh no, demand destruction. As soon as you get over $2,100, the Chinese and the Indians stop buying it, blah, blah blah. Nope.
Aiden Reiter
(Laughter) Well, I mean, is gold really a fear gauge or is it an economic misinformation gauge? Like, you talk to people who buy gold, they say, oh, well, the reason we’re buying this is because central bank reserves are just eating up and gobbling up all the world’s gold, and that’s not totally true.
Robert Armstrong
Not totally true. There’s always a story for why you buy gold but the underlying fact is terror is why you buy gold.
Katie Martin
Well, sometimes, like, gold is a bit of a funny one. We’ve talked about it on this pod before, but, like, sometimes gold goes up because it goes up in line with risky assets, so sometimes it’s treated as a risky asset. Sometimes it is treated as sort of an instrument of fear. It’s where you go if you’re terrified about the state of the world. This is that. Like, there is no plausible argument that this is an example of . . .
Robert Armstrong
Well, actually, I think there is. Some of the risk asset stuff is there. In other words, the gold trade has worked so well that I think there is some momentum in it. I mean, we’re getting away from our main topic and maybe we should veer back on to course, but I think there is a momentum aspect, a greed aspect in gold now. It’s the only asset that’s worked. So there’s probably some speculators piling on there.
Katie Martin
Let me tell you the rest of my little laundry list of things that have gone wrong for US markets so far this year. And this is also a really scary one. US 30-year government bond yields are up close to 5 per cent and the dollar is down 9 per cent so far this year.
So normally what happens is you have this safety valve that happens in markets when bad stuff happens and the dollar goes up and government bonds are in high demand so the yields come down. That is really not happening at the moment. So the US is suffering in the way that, like, normal countries suffer when they screw something up really badly, which is that their bonds weaken, their currency weakens, and that makes it all hurt that much more.
Robert Armstrong
So people are like, I’m looking at that 10-year yield and I don’t want it. (Laughter)
Katie Martin
I’m still not buying the damn thing. Meanwhile, some yields on Swiss government bonds have gone negative again, if you can believe it. We’re back in that world, so I can’t believe we’re talking about negative yields again.
Robert Armstrong
I didn’t know that we were back in Zirp, or what was the word we called it?
Katie Martin
Zero-interest rate policy. Yeah, Zirp.
Robert Armstrong
Yeah, we’re back in Zirp world. Yeah.
Katie Martin
So for those who were lucky enough to miss it last time around, negative yields work whereby the interest rate on the bonds is already pretty low, which in the case of Switzerland, they’re always pretty low. But the demand for these bonds is so high, the price on them is so high that you are guaranteed to lose money in nominal terms over the lifetime of this bond.
Robert Armstrong
But you’re OK with that.
Katie Martin
But you buy it anyway for the safety, because you know the Swiss are gonna give you your money back. So something very odd is happening in the world where people view US government bonds, even when they’re yielding close to 5 per cent, they still don’t want to buy the damn things, whereas they will buy the Swiss stuff even at negative yields ’cause they’re so worried about the state of the world. Aiden, talk us through some of the reasons why this whole squidgy mess is happening.
Aiden Reiter
Well, a lot of this could be because, as you said, people don’t wanna hold US assets. They are selling off their Treasuries. And typically when you buy Treasuries, you need dollars to do that. So if they’re selling off the Treasuries and not buying new Treasuries, that means the dollar is gonna go down. So that would suggest that Donald Trump has successfully scared off foreign investors. But we haven’t really seen so much proof that that’s happening besides the movement in the dollar and the yields. So we’ve had a bunch of Treasury auctions that have been mostly robust, right? They have not shown a big dip in foreign investors.
Robert Armstrong
The worst does not happen, that’s the nightmare, is the government shows up to sell its wares, to sell its debt, and nobody comes.
Aiden Reiter
And there was one shaky auction right after “liberation day” that people thought this was going to be happening, and then the auction right after was fine and since then they have been fine. There was actually a very good piece by our colleague Arjun Neil Alim in Hong Kong which showed that Japanese investors did start pulling out of Treasuries right after “liberation day”. But the pace at which they pulled out was not indicative of some major global shock, right? It was kind of in line with other medium to bad shocks that we’ve had over the past couple of years.
Katie Martin
Yeah, it was . . .
Robert Armstrong
So there is a little bit . . . I agree with, and I’m sorry to cut you off, Katie, or is that you cutting me off? I don’t know. Either way, I’m sorry about it. I agree with Aiden that there is a little . . . There is some . . . Like, markets are bad, all right? Markets are bad. But you don’t wanna exaggerate how bad they are, and I think Aiden’s point goes right to that, which is there has been a pullback in US assets. It is scary that the dollar and the Treasuries have broken their normal pattern. But this is not cats and dogs living together, right? It’s bad but pessimistically, you might say there’s plenty of room for it to get worse.
Katie Martin
Well, that is exactly where I come in. This is where I’m like screwing my face up and slightly sort of shaking my head. It’s like, yeah, this has like a whole lot worse that it can get. So you’ve already seen, you know, there’s a lot of, like, hedge funds that have moved quite quickly and have bet against the dollar and they’ve bet against Treasuries and they’ve made a lot of money. But there is, you know, in the corner of the room, this enormous monster that in market circles is called real money that is, these are, like, insurance companies and they are pension funds, pots of pension money that are massive and they move really slowly. They’re not like these kind of flighty bye bye bye (overlapping speech).
Robert Armstrong
So they have like three months of meetings that are like, should we change our allocation for US assets from 70 per cent to 65 per cent or whatever.
Katie Martin
They will have multiple meetings about this — as they should, because they’re looking after people’s retirement money. But this is a community of investors that is, like I say, very big, very slow-moving, that is hugely long US assets. It’s got far more US assets on its books than it should do if you compare the size of the US economy to the rest of the world.
So to me, I genuinely don’t get where your optimism is coming from because these investors look across the Atlantic, or maybe they’re sitting in the US already and they’re looking at what’s going on around them and they think, hmm, do I want to have 70 per cent of my portfolio in the US when you’ve got a president who is like, you know, just flinging all kinds of abuse at the chairman of the Fed, Jay Powell. When you’ve got evidence that the rule of law is like creaking at the seams, when you’ve got all these tariffs that are going to disproportionately hurt the US economy in relation to the rest of the world, I do not see a case for optimism here. Maybe I’m wrong. Tell me I’m wrong.
Aiden Reiter
Maybe it’s cautious optimism? To your point, we don’t know what’s going to happen with regard to those really big investors. Same thing goes for foreign investors, right? We’re only just starting to get data from Japan, which is the largest foreign holder of US Treasuries, and China, which is the second largest holder of US Treasuries, is very hard to track what they’re doing. So I’m cautiously optimistic because we just haven’t seen the big fallout yet.
Robert Armstrong
I think the points you make about pessimism and the worry that the slow-moving investment world changes its mind about the US at the margin is a very important point. And remember, we’re not talking about everyone selling the US, whatever. We’re literally talking about a couple of percentage points difference in your portfolio allocation — makes a huge difference for markets, right? And so it doesn’t have to be, you know, we’re gonna put all our money in Italian sovereign bonds, or anything like that, for this to be a very big change.
That said, first point I would make is there’s part of this that is just . . . markets were wildly overpriced on the risk asset side and something was gonna happen to bring them down. Stuart Kirk, our colleague, made this point very well in his column last weekend, which was like, all of these market messes are the same. They all have this aspect where stocks are trading too expensive, credit spreads are too tight, everybody assumes everything’s priced for perfection, and something has to happen. There’s some catalyst that almost doesn’t matter what it is that brings markets back to reality. So we’re seeing some of that process here.
The second thing I would say is that I am hoping, and to a degree expecting, that we are saved by the difference between stupidity and irrationality.
Katie Martin
Hm. Again, not getting where the optimism is coming from. (Laughter)
Robert Armstrong
So let me explain what I mean by this. So like I think in economic policy, the Trump administration has been stupid. They believed things about tariff policy that were false and they instituted policies on the basis of their false beliefs that had very bad consequences and are not getting the outcomes they expect.
Aiden Reiter
On the basis of ChatGPT equations, not just false beliefs.
Robert Armstrong
But yeah, but that’s dumb, right? (Aiden and Katie laugh) And dumb things happen. And we’re all dumb at one time or another. We all believe things that are not true to a greater or lesser degree, and we find out the hard way. Fine.
Irrational is different than dumb. Irrational is you do things that you know perfectly well are going to hurt you. I am prepared to think there is still some rationality in the White House. And of course, the prime example of this is I will make myself hostage to fortune and say here in front of God and everyone that I don’t think the Trump administration is gonna earnestly try to fire Jay Powell because that would be irrational. That would be self-destructive in a massive way and I’m betting they don’t do it, despite all the fears that they will.
Katie Martin
Here’s the thing. Like, it certainly looks like legally, Trump can’t fire Jay Powell, even though at the back end of last week he was saying the sooner this guy is terminated, the better.
Robert Armstrong
But as Chris Giles pointed out in his column . . .
Katie Martin
That’s the FT’s Chris Giles, by the way.
Robert Armstrong
The FT’s own Chris Giles pointed out that there is this, you know, that a lot of people have been following this trial before the Supreme Court about a member of the National Labour Relations Board, which is not as mighty and august a body as the Federal Reserve, but is somewhat analogous. And Trump sacked without explanation someone from the NLRB. That person sued and that case is now before the Supreme Court.
And if the Supreme Court should decide that the president can sack someone from the NLRB, maybe that implies that he can do the same to the Fed. All I’m pointing out here is that the legality is not completely black or white. The precedent is black and white. Don’t fire heads of the Fed, but the legal question is a bit open.
Aiden Reiter
So while I agree with you that I don’t think he’s going to fire Jay Powell, one of the reasons investors might be running away from the US and might continue to run away from the US Is not just because of, you know, monetary policy or fiscal policy, right — the trades. That stuff will change no matter who the president is, right? Every time we have a new president, they will pursue, most likely pursue, a different economic path. One could argue that all the chaos is not baked in until 2028 because in 2028, if there is a Republican president again, maybe this stuff really gets baked in for eight years.
But what is more concerning to me is the broader legal system. There’s a concept in markets that, you know, the reason they invest or the reason investors are OK with a country is because the rule of law is there, right? The rule of law, not even for democratic purposes, just ensures that businesses get fair treatment. So we saw it in Mexico last summer. The Mexican stock market took a nosedive because they pursued this judicial reform that a lot of US businesses felt would make them not be treated equal to Mexican businesses.
Robert Armstrong
You need clear laws, you need a dispute resolution mechanism that is fair and treats everybody equally and you need enough stability that you can see into the future.
Aiden Reiter
Yeah, and law is based on precedent. So if something happens just one time, the next judge can use it as an example. What we have right now in the United States is a lot of novel legal directions taken by the Trump administration and some squidgy judicial decisions in the past year that suggest that the Trump administration could kind of do whatever it wants on some of these issues.
So they’ve pursued large law firms. That makes it seem like they might pursue other big businesses. They have pretty awfully and incorrectly detained some people and taken them extrajudiciously out of the United States. That suggests that there’s issues to the rule of law. But even more intrinsic to that is there’s some argument right now and some lack of clarity on whether or not the Trump administration will actually listen to the courts in returning some of those detainees.
Now, if the Trump administration doesn’t have to listen to the courts, that is a huge deal for businesses, that is a huge deal for democracy, and it suggests that in the future, the US is a less safe investment if the president or whoever’s in power can just do whatever they want.
Robert Armstrong
I’d echo that point about Jay Powell, right, to bring it into a markets context. Let’s suppose, a little thought experiment, they managed to get rid of Powell and they put in some guy of their own. And let’s suppose that person, so this man or woman, turns out to be a very principled economist and actually ignores all the political pressures they would immediately find themselves under. That doesn’t matter. The very fact that Trump broke, you know, 100 years of precedent and removed the chair of the Federal Reserve, that in itself, no matter what the ensuing monetary policy is, would scare the knickers off of everyone.
Katie Martin
There’s a couple of points there, right? One is, as you say, it’s really important that whatever the credentials of the next Fed chair are, that the markets can see that this person has been appointed fairly and doesn’t sort of owe the president any favours.
The other thing that kind of bugs me here is if in, say, two weeks’ time, he and the Treasury secretary, Scott Bessent, make an announcement and say, look, we’ve picked our next Fed chair. Here it is: Mr M Mouse. And this, you know, this super-genius.
Aiden Reiter
(In high-pitched voice mimicking Mickey Mouse) Oh, boy, guys. Oh, we’ve got to cut rates. (Robert laughs)
Katie Martin
You know, imagine they, you know, appoint some sort of joke candidate who spends then the best part of this next year: (In high-pitched voice) Oh, look, they didn’t cut rates, they should have.
I’m really sorry that I went with Mr M Mouse.
Robert Armstrong
And saying, when I’m in, that’s what the person could say that would really be destructive is, don’t worry about what Jay Powell is doing. When I’m in, here’s what rates are gonna be. And you can just look . . . the market can just look forward to May of next year. Now it’s a little bit harder than that because just a chair does not a monetary policy committee make. We should know.
Katie Martin
You and I know that come on, it’s these sorts of vibes are really important to how markets operate.
Robert Armstrong
But I agree with you that the M Mouse scenario that you just outlined would be worse than firing Jay Powell because not only would it be in effect firing him, but you would have created an impossibly confusing situation for the world investment community. And I think this is why it’s one: ’cause, like, you think foreign assets are leaving America now? Wait till Mickey gets in charge.
Aiden Reiter
But also, what happens if these big, you know, lawsuits and/or actions taken against big law firms, they’re currently working their way through courts, for those who didn’t already settle with the Trump administration. What happens if the Trump administration either wins those lawsuits or just ignores whatever the ruling is? That suggests they can do that to whatever business they want to.
Robert Armstrong
Look, I don’t think it’s gonna happen. I think my . . . I’m talking to a lawyer friend over the weekend and he said the positive interpretation of what’s going on with the Supreme Court is that the Supreme Court, especially the two justices on its Trumpy wing, are gonna give the president the benefit of the doubt on every procedural issue. But eventually they’re gonna have to actually rule on the substance. And when they rule on the substance, I just don’t think the Trump administration has the intestinal fortitude to flout a decision of the Supreme Court. They will grouse and whine and this and that, and they’ll get in line. Just like they will not appoint Mickey Mouse, I don’t think, or fire Jay Powell.
In other words, I think there is a point where the pressure is great and self-preservation instincts do kick in for this administration. I may be made a fool by events, but this is the life I have chosen.
Aiden Reiter
Mickey Mouse will be laughing on your dead stock portfolio.
Robert Armstrong
You know, you have to make . . . I’m not saying it’s a 100 per cent prediction but, like, I’m putting my money on there are limits to the irrationality of these actors.
Katie Martin
So what I’m hearing here is a bunch of reasons to continue to be very nervous about US assets. And the only real counterweight to that is just like blind optimism from Americans like Rob, who are just like, it’s gonna be fine. It’s gonna be fine.
Robert Armstrong
I’m not saying it’s gonna be fine. It’s a difficult moment. What I’m saying is we’ve had difficult moments before in the history of this country. We had difficult moments in the first Trump administration. And the fundamentals supporting American assets are largely in place; we can course-correct here, you know, and we mustn’t overreact. We mustn’t overreact to a market that was too expensive in many ways and is, like, returning to a more reasonable valuation on risk assets. We mustn’t overreact to 10-year Treasuries that look, they’re at 4.5 per cent, less than 4.5 per cent yield. That’s not a crazy number for them to be at.
Trump’s superpower is making people feel crazy, right? That’s his magic power. It’s like, you look at him, you can’t look away, and he evokes an either positive or a negative, very strong emotional response. And this too shall pass.
Katie Martin
I mean, the broad message here is I still think you guys are too optimistic and I will beat it out of you eventually.
[MUSIC PLAYING]
So with that, we’re gonna be back in a second with Long/Short and we’re gonna do it a little bit differently this week. Find out — are we long or short America?
[MUSIC PLAYING]
Okie dokie, it’s time to be long or short America. This is where we are long a thing we love or short a thing we hate. Guys, let me chuck some random market indicators at you and you can tell me what you think. Well, let’s start with stocks. Everyone loves stocks. Where do you think the S&P 500 index rounds out this year? So this is the S&P 500 index, biggest US stocks. It’s now about 5,200. Where does it end 2025?
Robert Armstrong
I think that we were due for a good old-fashioned correction in US stocks, even all the Trumpy stuff we discussed aside. And I think, what are we down from the peak in February? I won’t . . . I don’t wanna bet in exactly your terms. I’ll say from that peak in February, we’re gonna end up down at least 25 per cent, which is just like a good, solid, mid-sized US stock market mess.
Katie Martin
I mean, mid-size — it’s pretty chunky.
Robert Armstrong
Yeah, no. It hurts, but it’s not 2008.
Katie Martin
Sure, sure, sure. Yeah, yeah, yeah. Aiden, what are you saying?
Aiden Reiter
I mean, I think it might be a little bit more than just a mid-sized correction. I think there will be a correction and I think a correction was due for some time, but I really do believe there’s actual headwinds beyond just the risk-off sentiment that’s in the air. So you could have a real recession, you could have a debt panic this summer, you could have some AI news that has, you know, has been brewing under the surface for a while that could come out now.
Katie Martin
Mag Seven’s been getting killed, all those Big Tech stocks.
Aiden Reiter
Yeah, so, I mean, I could see it being 25, I’m just gonna do a little more than 25.
Robert Armstrong
You’ll take the under . . .
Aiden Reiter
Yeah, I’ll take the under. Thirty. We’ll call it 30.
Katie Martin
You could say that I wanted to be more pessimistic than you, but I think 30 surely is where you tap out.
Robert Armstrong
People start buying this stuff, people start buying American stocks, third off.
Katie Martin
(overlapping speech) OK, Aiden, you mentioned the risk just there of some sort of bond shock at some point this year. Where do you guys think the US 10-year bond yield ends up by the end of this year? So it’s now 4.4 per cent. And as a reminder to listeners, the yield goes up when the price goes down. So higher yields are generally not a good thing. It raises cost of borrowing all across the economy. What do you guys reckon?
Aiden Reiter
Yeah. I mean, I think that we’ll probably end up a little higher than that, around 4.5, but that will hide a lot of volatility in the midterm. So this summer, we have to have something to address the US debt ceiling. At the same time, we have slowing growth, and while there’s gonna be just probably something of a debt panic, since not only do we have really high debt payment costs but we have an IRS that’s been defunded, so tax revenue might be lower than it otherwise would have been. And you have a low fiscal impulse, meaning that there’s gonna be less spending by the federal government in growth-positive activities.
All that said, I think there will be a debt panic at some point this summer. You can see something as high as 6 to 7 per cent. But then there’s going to be a recession, right?
Robert Armstrong
Whoo! Look at Aiden! Seven per cent on the 10-year! My man!
Aiden Reiter
But if you believe there’s going to be . . . That’s not where my end of your prediction is, though, to be fair, right? If you believe there’s a recession, that is going to put a downward pressure on yields. So I feel like we’ll wind up a little higher than where we are, but there will be a lot of volatility in the middle.
Katie Martin
Seven per cent, Aiden, if that’s right.
Robert Armstrong
Seven per cent. I’m gonna be, like, barring the door because the zombie hordes will be trying to knock it down. (Aiden laughs).
Katie Martin
What are you saying, Rob?
Robert Armstrong
I just think you guys are pessimists. I’ll give you a conditional answer to that one. You guys are pessimists.
Katie Martin
No, come on. None of this conditional nonsense.
Robert Armstrong
OK. I just think, like, if there is a recession, the 10-year is gonna be lower than 4.5, you know? So that’s the condition. I think the chances of recession, I don’t know what they are, but I’ll say look, if the slowdown continues, gets worse, there is a point at which you’re like, oh, the hell with it, I’m just buying some Treasuries. So you see, that stabilises the yield.
Katie Martin
Yeah, maybe.
Aiden Reiter
But there will be a panic in the middle, I’m sure.
Katie Martin
Yeah. So the dollar, what do you think happens to the dollar over the course this year? As a reminder, it’s down. Let me have a look at my piece of paper. It’s down . . .
Aiden Reiter
Katie, what do you think happens to the US?
Robert Armstrong
Yeah. You’re the smarty-pants here, Katie.
Katie Martin
Dollar’s down 9 per cent so far this year. I think it’s got an awfully long way to go from here. So the euro now trades at about $1.14. I think it’s going to at least 1.20, 1.25 maybe over the course of this year. There’s all sorts of reasons to like Europe, all sorts reasons to hate the US. It’s a pretty easy FX trade, if you ask me. What do you guys think?
Robert Armstrong
Well, Katie, you know that I’m a person completely without principles.
Katie Martin
Yes. (Aiden laughs)
Robert Armstrong
But one of the few principles that I do have is that predicting currencies is a mug’s game.
Katie Martin
Mug’s game. Yeah.
Robert Armstrong
It is just, you know, it’s a 50.05 per cent chance that you’re right if you’re the smartest person in the game. Good luck. I say good luck to you both with your predictions.
Aiden Reiter
I’ll say that I think the dollar, there’s already been a steady march away from the dollar slowly for the past 60 years. So while I think it will accelerate, I don’t think it’ll be a drastic acceleration, or at least more so than we’ve seen in the past month. So I can imagine the dollar being down a little bit more, maybe a lot of it more for a little bit. But I also don’t wanna overstate the strength of the euro because while we have this fiscal impulse in Germany, we haven’t really seen it in the rest of the continent yet. It’s going to be not evenly divided. So it could be a German story, not the rest of Europe. And that suggests that 1.20 is a little optimistic.
Robert Armstrong
I like that point, Aiden, that we might be kind of at peak optimism about European expansion.
Katie Martin
Again, I am shaking my head at you guys. You are too optimistic. You Americans have been conditioned over your whole lives into thinking that everything will work out just fine.
Eventually, I will grind you down, but probably not before Thursday, listeners, which is when we’ll be back in your feed. So listen up then. And in the meantime, be like Jay Powell and stay independent.
[MUSIC PLAYING]
Unhedged is produced by Jake Harper and edited by Bryant Urstadt. Our executive producer is Jacob Goldstein. We had additional help from Topher Forhecz. Cheryl Brumley is the FT’s global head of audio. Special thanks to Laura Clarke, Alastair Mackie, Gretta Cohn and Natalie Sadler.
FT premium subscribers can get the Unhedged newsletter for free. A 30-day free trial is available to everyone else. Just go to FT.com/unhedgedoffer.
I’m Katie Martin. Thanks for listening.
[MUSIC PLAYING]
Aiden Reiter
(In a high-pitched voice) Oh boy, lower rates! (Laughter)
Katie Martin
It’s a surprisingly good Mickey Mouse impression that you do.
Robert Armstrong
(In a high-pitched voice) Oh boy, tariffs are not inflationary. (Laughter)
