Macro Observations

We’re approaching a very critical juncture for the financial markets. Most of the trailing hard data we’ve gotten to this point has been through the end of March. This week’s Q1 GDP report also takes into account activity through the end of March, but the impact of the Trump tariffs can clearly be seen. In the end, the Fed probably wants to avoid recession at all costs and that’s the likely path we’re going down. It’s still a high risk environment.

There’s been a definite change in tone from the White House over the past few weeks. Let’s assume for a moment that this de-escalation on the trade front has some legs. What does that mean for asset prices? I think there are three asset classes in particular that are worth watching and here’s how I think they could react in this scenario.

There are a couple of things that I’m still watching here - gold and the yen. I think they’re both interrelated right now and perhaps not for good reasons. I firmly believe that the reverse yen carry trade isn’t done. In fact, the market may be at a critical tipping point right now if the yen strengthens any further.