Hi guys,
I didn't want to make a post but I can't find a discussion thread on this. I found this article on The Site That Dare Not Speak Its Name. The article is pay-walled but it is probably on archive by now. This is the short and sweet:
Executive Summary
* The textbook impact of the world’s largest goods importer, the US, imposing an ultra-high tariff on the world’s largest goods exporter, China, is for global goods prices to fall.
* Thereby, while Trump’s tariffs will be inflationary for the US they will be deflationary for Europe.
* Go long euro rates (EONIA futures) versus US rates (Fed fund futures) June 2026 contracts.
* Overweight European government bonds versus US Treasuries, with the top pick being UK gilts.
* Stay overweight the European versus US stock market, until the US valuation premium unwinds from its current 50 percent to a ‘fair value’ 25 percent.
I haven't heard this idea before. Isn't it more likely that everybody will boost tariffs everywhere? It looks to me like the EU is being attacked by China. This is pure mercantilism. Right? Is this analysis fundamentally correct? Tariffs cause deflation, by definition, right? Look at the great depression, for example.