The 2025 Macro Playbook: Central Banks, Crypto, AI, and Tariffs

Central Bank and Government Coordination

• 🤝 Central banks and governments are now openly coordinating to manage debt and economic cycles, effectively removing left-tail risk from markets.
• 🏦 The transparency of this coordination, evident in events like the 2020 pandemic response and the 2023 Silicon Valley Bank crisis, signals a new era where this collaboration is no longer hidden.
• 📉 The need for lower bond yields is a primary driver for central bank actions, especially with the US approaching a massive refinancing cycle.

Navigating Economic Challenges

• ⚠️ If markets are unwilling to cooperate with lower yields, central banks will likely engineer scenarios using financial stability as an excuse to intervene.
• 🏦 Alternative methods, such as forcing banks to hold more US Treasuries through regulation, are being considered to manage bond issuance.
• 🇯🇵 The US may follow Japan's path of protecting the yield curve to maintain debt sustainability, especially as debt-to-GDP ratios exceed critical thresholds.

The Impact of AI and Automation

• 🚀 AI is poised to significantly boost productivity, potentially leading to faster GDP growth but also raising questions about the future of the workforce.
• 🤖 Automation driven by AI could displace a large portion of the workforce, necessitating discussions around universal basic income (UBI) or alternative income models.
• 💡 The value of human interaction and unique human experiences may become paramount as AI handles more technical and analytical tasks.

Tariffs and Global Trade Dynamics

• 📈 Tariffs are increasingly viewed as a permanent revenue source for governments rather than just a tool for trade wars, with a shift towards taxing consumption.
• 📉 Despite concerns, tariffs may not be as inflationary or recessionary as commonly believed, with service prices potentially falling due to AI-driven efficiencies.
• 🇺🇸 The US is seeking tariff equalization, a move that could become the norm and lead to a recalibration of global trade strategies.

Asset Allocation and Future Outlook

• 💰 Crypto is increasingly seen as a macro asset and a hedge against currency debasement, especially given the backstopped nature of the financial system.
• 📈 A coordinated global liquidity response is highly probable, which would likely reignite interest in debasement bets and risk assets.
• 📅 The short-term market low is anticipated between April 15th and April 30th, presenting a final opportunity to load up on risk assets before potential acceleration in liquidity.
• 💡 The long-term outlook favors duration assets like crypto and tech, with crypto potentially outperforming tech due to security concerns surrounding IT infrastructure.