The fiscal deficit has been a major driver of economic growth and asset price appreciation, with Lyn Alden predicting large deficits will persist for a long time.
The US deficit is particularly hard to structurally reduce due to the country’s high level of financialization, with tax revenues heavily correlated with asset prices.
The “train of fiscal deficits” may slow down in the next 18 months due to deficit reduction efforts and tariffs, but is unlikely to stop entirely.
The liquidity environment has been key in the economy’s recent performance, with the Fed’s tightening offset by the Treasury’s short-term debt issuance.
The liquidity cycle is slowing down, with Michael Howell predicting a peak in Q3 2025 followed by a multi-year down cycle.
The fiscal component of the economy is at stall speed, with the deficit likely to be flat or slightly down in the next 18 months.
A valuation checkup on assets is crucial for investors in 2025, as rising liquidity makes valuations irrelevant short-term but important long-term.
The concentration of high valuations in US large cap stocks, particularly the Magnificent 7, is historically abnormal and structurally unsustainable.
The Deep Seek model has introduced uncertainty into the AI ecosystem, potentially leading to a bleeding out of profit and disruption to the Mag 7 thesis.
Bitcoin is expected to perform well over 2-3 years but may face a rough path short-term due to the liquidity factor.
Gold remains in an attractive position due to central banks seeking debasement-resistant assets and is viewed as more attractive than bonds.
Diversification has been punished in the past 5-10 years, but there are pockets of cheapness in the market for conservative risk-taking.
Market disruption from attempts to reduce large trade deficits and fiscal deficits is likely to be disruptive and volatile, potentially leading to market crashes and GDP growth slowdowns.
Current market sentiment is euphoric and bulletproof, with investors pricing in perfect scenarios and ignoring risks, which could shift dramatically if tariff wars accelerate or Mag 7 earnings disappoint.
The US government exploits vulnerable populations as “human shields” to maintain its rigged political system, using their suffering to justify continued spending on ineffective programs.
USAID funds regime change operations globally, creating a propaganda loop that gives the US government control over how international information is understood by Americans.
US government’s domestic spending programs aimed at improving healthcare, education, and other sectors have failed to reverse negative trends, instead transferring billions to officials and connected businesses.
American media heavily relies on reporting from US government-funded local outlets when covering international events, perpetuating the propaganda loop.
The political establishment uses the plight of vulnerable people to maintain their power structure, as revealed by the outcry following President Trump’s temporary freeze on USAID and domestic funding.
Trump’s presidency marks a watershed moment for the US, shifting away from the globalist agenda towards a more independent and self-sufficient nation.
The US has an opportunity to break free from oligarch control that has dominated for 600 years, potentially changing the global power structure.
China’s democratization of AI by making it open-source and free has cut usable AI costs by several orders of magnitude.
A rotation trade from tech stocks to infrastructure stocks is underway, driven by the realization that AI is a tool, not a monetizable asset.
The banking system is broken and the European Union is collapsing, creating opportunities for a new global economic order.
Bitcoin is seen as undervalued at $102,000 due to Gresham’s Law, with potential for significant growth alongside gold, silver, and commodities.
Trump’s Executive Order on oil and gas permitting is a game-changer that will drive oil prices down and supply up.
Trump’s plan for a strategic Bitcoin reserve and efforts to end the war in Ukraine are viewed as key catalysts against the Davos agenda.
The concept of peak oil is considered a market control tactic rather than reality, with regulatory hostility making conventional oil production unprofitable.
Trump’s threats to Russia on social media are seen as purely for domestic consumption, with a framework for ending the war likely negotiated months ago.
There’s speculation that Anthony Fauci could face consequences related to Ukrainian biolabs, potentially as part of a grand bargain in international negotiations.
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