Kurv Your Enthusiasm - Episode 07
Navigating the Tariff Tide: Markets, Sentiment, and Policy Impact
In this episode of Kurv Your Enthusiasm, hosts Howard Chan and Dominique Tersin discuss the current state of the economy, focusing on recent economic indicators, consumer sentiment, and the implications of government spending, 'Big Beautiful Bill' and budget deficits. They analyze market reactions to these developments and share insights on investment strategies in a volatile environment. The conversation concludes with an outlook on global markets and asset classes, emphasizing the importance of adapting to changing economic conditions.
Chapters
00:00 Introduction and Market Overview
05:52 Economic Indicators and Consumer Sentiment
10:31 Budget Deficits and Government Spending
13:44 Market Reactions to Economic Data
20:11 Volatility Strategies and Market Positioning
30:05 Outlook on Global Markets and Investment Strategies
Howard Chan (00:00)
I'm curious, what do you think about emerging markets? Do you think they're a beneficiary or kind of just a sideline on all of this tariff wars?
Welcome to the seventh episode of Kurv Your Enthusiasm. We are your host, Howard Chan.
Dom Tersin (00:18)
And Dominique Tersin.
Howard Chan (00:20)
This podcast is a discussion of everything relating to investing and everything adjacent to it. It is important to remind the listener that the trades we discuss on the show are not meant to be financial advice. And we're recording this on June 10th, 2025 at 1230 PM. All right, Dom, it's been a while since we recorded the last one. A lot has happened. We've been hard at work.
on you've been hard at work on managing our portfolio. So it's been a while, but it's kind of nice to be a little bit away. Oftentimes, you know, you step back, you get, you can have a broader view of what's has happened. So it's been about two months since we recorded the last one. We'll, get back on schedule. Obviously things after liberation day has been a little bit volatile and
We'll talk a little bit about that. But I think we also want to do a little bit of a new structure that hopefully, based upon suggestions from the listeners, and hopefully we can tie this into what we see in the market, how do we respond to the market, and answer any questions that we get from our listeners. So we want to start with a market update.
It's been a couple of months in which we now have a lot of economic data coming in. So in terms of economic indicators, in the last two months, we've seen that business sentiments, both in the form of ISM and consumer surveys, continues to be very weak. In ISM, we're now below the 50 % level, 50 level, which is generally if it's below 50, there's sort of a
is a sort of a contractionary indicator. And consumer surveys from the University of Michigan remains almost at their multi-decade lows. At the same time, we've seen real GDP growth come in negative 0.3 % in quarter one. But quarter two growth is expected to be in positive territory around 3.8%. The measurement of labor market.
unemployment rate and non-farm payrolls saw a bit of increase. Non-farm payroll is at about 140K last month, and unemployment remains pretty stable at 4.2%. And lastly, we look at inflation. The Purchase Manager's survey says that the prices remain pretty stable. And both core and headline inflations
are lower at CPI is about 2.3 % and core is about at 2.8%. So with all of this economic data, Dom, what's your current outlook based upon all of this?
Dom Tersin (03:07)
What we can say from those data is that there is divergence between the soft data like the consensus surveys from the business and from the consumer. are different from the hard data from the national statistics. The survey seems to picture
a lower growth environment while the hard data suggests resilience, for now at least. So in theory, you could think that sentiment surveys are forward-looking, but it has been the case for a while now, and it says yes to show in the hard data.
Okay, real GDP was down 0.3 % last quarter, but that's on the back of preemptive rises in imports. So people were just front-loading the tariffs. employment is resilient. Some people could say it's hiding a certain reality of the job market, but for my...
viewpoint there is no an abrupt decrease in falling wages. still good sell as economy. mean, wages are increasing at 3.9 % the earnings. So that's good and that's supportive for consumption.
I
Howard Chan (04:29)
Is that the end of your answer? OK. All right. Well, I'm generally pretty in line with what you're saying, but I think there's, in my mind, there's a lag effect here. So the tariffs were obviously announced April 2nd. And the ones that usually have to react first is business. And so given there was a period in which there was high uncertainty, there's a
recognition that the tariffs might be on and then ultimately got pulled back, business have to make planning decisions. And so the business usually have to adopt some sort of economic forecast. And I think many, companies are planning for higher inflation, supply chain issues, not being able to trade with China. So the sentiment surveys from the business perspective went down.
I think that is pretty explainable. Same thing with consumers where they're looking at the headline. But the tariffs haven't really gone into effect because we've gone through this temporary reprieval other than this reciprocal tariffs. So as the consumer, you haven't really felt it. You've seen it in headlines, but you really haven't felt it. And so all of the hard economic data remains pretty strong.
the tariff inflationary effects haven't really fed into the true economy. But I think that's starting to change. Just last week, we've seen companies like Walmart stating that prices on certain items will now starting to go up. That won't feed into the inflationary figure until next month, actually tomorrow. And then also you still see imports from
the import levels of the US remain very, very low. So there's going to be items that are going to run empty on the shelves. And so now the real impact into the economy is just filtering in. So I think the sentiment you're right is a forward-looking indicator, but that forward-looking indicator is now. And I think we're going to start seeing some of this effect, at least the uncertainty part, start filtering into the real economy.
So, you my view is that economic activity is slowing down. Whether we go into a recession is different questions about what the response from the government's policies are. But I think this delay makes sense. And even though inflation is going down, it hasn't really included sort of the inflationary effects of tariffs. And that will start
potentially coming into the inflation figures. So I think there's another leg to this. We'll have to wait and see. But I think right now all of these make sense, even though it's a little bit contradictory. think the sentiment reflects what we've gone through since April. And the real economy is just about to get some secondary effects.
Dom Tersin (07:21)
One of the things we have to look at...
economy is budget deficits and what the new administration is doing right so we
Howard Chan (07:32)
Yes. And that comes into,
yeah, so that leads into the second topic that has been in the news a lot, which is the big, beautiful bill. The Republican Party has been both in the House passed initial version of the budget bill for the US. Right now, the bill is
projected by CBO to generate about a 2.4 trillion of deficit over 10 years by extending the existing tax cut from the first Trump administration and then a little bit even more tax cut for higher wage earners. And by cutting some other services that
we have, the cutting of the services does not offset the tax cut. that is expected. The budget deficit is now really expected to rise from 6.4 to 7.4 % of GDP. So it doesn't help when growth is slowing at the same time. So what's your view on that?
Dom Tersin (08:44)
Yeah, as you said, the budget deficit will increase from 6.4 to around 7.4. I mean, that's a lot.
see to spend. It just raises the question of what's the limit? 7.4 % over the Trump administration. What did you say? 2.4 trillion over 10 years? 2.8. I think it's assuming.
Howard Chan (09:13)
2.8 trillion.
Dom Tersin (09:20)
that the tax cut will be reduced after the Trump, so it might be even higher. And yeah, it's... most of it is just tax. Yeah. Okay.
Howard Chan (09:28)
Oh, sorry, sorry. So we have to, I have to correct this. is, we have to, it's 2.4. Okay. Uh, it's,
uh, it's, it's expected, uh, it's expected to spike deficits by 2.4 trillion over the next decade and leaving about 11 million of people without health insurance.
Dom Tersin (09:46)
And is that good?
And is that including interest payments increase on the new debt?
Howard Chan (09:55)
I don't know actually.
Dom Tersin (09:56)
I think it's on top. But yeah, from 6.4 to 7.4, all from tax cuts, the spending decrease is actually not that large, if you will, maybe 20 % of it. And the interest payments is actually offsetting the spending decrease. So...
Debt to GDP will increase from 120 to 130 % of GDP in four years time. And the path will not change. So I guess it will be a problem for the next president. And as...
Howard Chan (10:35)
Well, as a French
citizen, how do you feel about this? I feel like this is a movie you've seen before.
Dom Tersin (10:42)
Exactly, just the politics, the policies that we've seen for the past 40, 50 years in France and probably the West in general.
instead of making decisions on tax rises for the case in the US or spending decrease for the case of France, you just do the status quo, continue borrowing.
you get a real effect. But at the end you will get a lot of debt that will have to be refinanced. There is no escape. So it will be very financed by inflation of some kind. It looks it's the way the US is doing it. Or default.
Howard Chan (11:26)
Yeah, we brought this up actually, I think maybe in the second or third podcast that we did, right? Which is that the US is sort of in this precarious fiscal situation where for the first time, debt to GDP is about 100 or slightly over 100%, which means that we're issuing debt to pay interest on debt.
anybody who understands finance, you have the income component, which is, you know, your, your tax receipts, and then your expense. Right now we're spending about 1.8 trillion more than what we take in. And so, you know, having more tax cut really doesn't help the situation. In fact, it makes the work, you know, situation worse.
I mean, really, you know, in my view is obviously, you know, the way anybody who is in kind of a precarious financial situation knows that if you're overspending, you either increase income or you and or most likely you have to do both cut your expenses, right? Which means that at some point in the future, you know, this is very hard for politicians, which is we're going to have to cut services, the largest places to cut.
the largest expenditures are social safety nets, social security, Medicare. And then really, we're kind of at a point where you just can't cut your way out. You also have to increase proceeds, which we think that means higher taxes for the tax base. Both are very, very uncomfortable situations, right? So I guess, Dom, you know, if you were government, how
There's other ways in which you can manage this imbalance. Given that raising taxes is extremely unpopular and cutting expenses is also unpopular, what other ways can you actually balance that?
Dom Tersin (13:16)
Okay.
The administration is trying to... That was the whole point of tariffs as well, right? To make foreigners pay for the taxes in the US. But the way that it's going, it won't be that much, or at least not as high as expected.
and we actually still don't know the details.
the other way yeah yeah yeah that's yeah we we said it no yeah i i've not it's because we i said it before but okay and the other way is the inflation
Howard Chan (13:45)
inflation.
But I'm just telling you, we're going to cut that out, but you have to say it. You have to say it.
Dom Tersin (14:03)
If you can get a high nominal GDP because just of inflation, you will decrease your denominator of the deficit to GDP.
You hear that? But that's painful. Usually it's more painful on the...
lower the size of income.
Howard Chan (14:21)
And we just went through an inflationary period, right? And people love inflation, right? So that's another bad choice for people to have. So it's difficult. There's not a lot of good issues until somebody makes the hard choices of increasing tax receipts or decreasing spending.
Dom Tersin (14:37)
And
maybe one way, joker card that the administration will place there will hope that those tax cuts and deficit spending will increase growth in the long term.
but that's not what's feeling.
Howard Chan (14:53)
See, I don't understand that argument because
I think debt is growing at 7%, right? GDP growth at maximum is two, 3%. How are you going to squeeze out another 4 % in a developed country, right? We're not an emerging market country where it is high growth. So I don't really quite understand how the argument of deregulation, you know, stimulating growth can match the speed of which we are.
Dom Tersin (15:09)
Yeah.
Howard Chan (15:22)
increasing our debt.
Dom Tersin (15:23)
especially as this economy is the top economy in the world, right? Already!
Howard Chan (15:29)
Yeah. well, you know, I did the key thing that we, I have always learned is you don't invest on bit based upon what you think should happen. You should invest on what you think will happen. And so the likely, scenario is that the fiscal situation for the U S and to be honest, most, you know, developed world is going to get worse. And so how, how is that actually
How does that manifest in the market?
Dom Tersin (15:57)
The increase in borrowing seen in the bond market, especially in the long-term, there are two ways to look at it.
Howard Chan (16:09)
I guess one market event that happened was that Moody's downgraded the US, right? This is a little bit probably less sensational than it sounds because quite a few years ago, S&P downgraded US to a AA+
Right? AA+ right? Or what is it? Not AAA, right? Yeah, S&P downgraded the US and there was a lot of fear because a lot of financial mandates, investment mandates for pension funds, they have a requirement to hold a certain amount of AAA assets. And so the fear was that when the US was downgraded below,
Dom Tersin (16:40)
Just as long as...
Howard Chan (16:59)
AAA and Fitch subsequently also downloaded it. So the average score for the US ⁓ actually went down. The fear was that a lot of pension funds and large institutional investors have had to sell treasuries because they can no longer hold those assets. And that selling would precipitate a negative cycle, then the yield would go up and that means worse financial situation and more selling will have to happen. ⁓
But that was a legitimate fear. But since then, a lot of these agreements, these mandates, the requirements of holding amount of assets have been changed. So Moody's downgrading the US a few weeks ago is not as big of a deal anymore because a lot of, I guess, institutional investors have been anticipating that the final rating agency would ⁓ downgrade the US.
In other ways, guess, Dom, how has that manifested in the market?
Dom Tersin (18:03)
So we had in two months since liberation day the 10-year treasury was at 30 basis points of yield. The 30-year is actually up 50 basis points. And another part, the real part of the market, maybe more for specialists, the credit default swap ⁓ of the US was up from ⁓
30 to 50 up to 50 basis points. This crazy default swap is just a price of default of the mighty US treasury ⁓ In truth, it's not really a surprise after the Moody's announcement because it did increase from 30 to 50, but in a way for the past two, three years, it was already there more or less.
What really moves now is the real bond market, the long end 10-year treasuries and 30-year treasuries. Why more the long end than the short end? Because on the short end, it's more influenced from the Federal Reserve. We'll be able to lock.
the risk premium and the risk that you have from inflation fears will...
infusion fields and default fears would be more effective on the long run.
Howard Chan (19:35)
Yeah, that would have been an interesting trade, right? I think the five-year CDS credit default swap, I think it's a low probability, not that it can happen, but pretty low probability that the US would default in five years. I think we would have a lot more problems if that was high probability. that ⁓ probably being long, five-year CDS probably would be a good trade in the portfolio.
Dom Tersin (20:05)
Okay. Now, ⁓ short. ⁓ You asked Treasury can't default.
Howard Chan (20:07)
Think so.
That's what you say, but there's a, you know, there's a technical default and then there is pseudo default, right? one of the things that was interesting.
Dom Tersin (20:22)
They will just
inflate.
Howard Chan (20:27)
Well, one of the things they did do in the last few months was the Treasury bought back $10 billion of Treasury. That sounds a lot, but think 10 billion out of 1.8 trillion of deficit, that's nothing. ⁓ But I think one of the stated goals for the administration is to extend maturities. ⁓
forcing people to extend maturities. And in some ways, people can construe that as a default because you are not meeting your obligation in the same timeframe.
Dom Tersin (21:11)
And in a way, from what I read, the...
Reduction of regulation on the banking side would allow banks to buy long-term and be more free to invest in long-term securities.
Howard Chan (21:26)
Yeah. Well, that kind of leaves us, know, so the economic data is a little bit mixed. A business is a bit more wary than the consumer and there's this new bill that's coming down the line. So that leaves a interesting position for the Fed. And at the last meeting, the Fed left his interest rate unchanged at the range of four and a quarter to 4.5.
So how do you think based upon these economic data, what's the outlook for Fed decisions?
Dom Tersin (21:59)
Yeah, the Fed maintained their rates and with all the bullish sentiment that we had for the past two months ⁓
we just went back to where we were in December. We've just one to two fed cuts this year. think it was in February, March, we had up to four cuts priced in. But now it's just one to two.
and the next meeting is in one week. It's expected to hold So that will leave four meetings left for this year where they could potentially cut. And
I would be biased for more. In fact, that's what I said in December, in general.
Howard Chan (22:54)
I know, I was just going to say our podcast
in December and January, we are still on track, right? We said ⁓ maybe one or two cuts, our real rates is really high. Although, you know, situation's a little bit different, but ⁓ we're still pretty good on track in terms of a scorecard. But actually you bring this up, you know, so given that
Dom Tersin (23:01)
Yeah?
Howard Chan (23:23)
labor markets are still pretty strong. We see inflation going down.
why do you think rates are going to hold?
Dom Tersin (23:30)
There is, inflationary impact of tariffs and also the impact from the budget deficit. In a way, the Fed could counterbalance the effect of massive supply of money from the government by holding rates.
Howard Chan (23:48)
Yeah. All right. Well, so now that we kind of get a good cover of how economic activities have developed, policy, it'd be good. Actually, now we have a retrospective since our last recording, which is the day before Liberation Day. And now we've gone kind of full cycle on this Tariff War Let's maybe review a little bit about how financial markets have
Dom Tersin (23:50)
That's on.
Howard Chan (24:16)
reacted to the whole entire cycle. And then we can talk a little bit about, how our strategies using volatility have been able to navigate this entire tariff cycle, the current cycle. It's not over yet, but at least since liberation day until now.
Dom Tersin (24:32)
Yeah, since Liberation Day, the market went down a lot and then back up even more. So that now on two months, the S&P is at 7 % and the Nasdaq 100 at plus 13%, which makes them positive for the year, which is pretty nice.
away from the equities, the effects, the dollar was very weak. It lost 9 % year to date, 5 % from the last time we spoke. That's a lot for a large currency, that is the dollar. Probably because...
Tariffs, that's what Trump wants. A short dollar will reduce the import, if there is, and that will have a negative effect on the equity that is held by the foreigners. So the foreigners make 7 % from the S&P, but they lose 5 % on the FX.
So that's one aspect which is important for them and that could be important for US investors. Maybe they could consider international markets more than usual. Right now US is still at 70 % of the MSCI want equities. there's room to invest away. What else? Well...
Bonds down, Forex down, that is good for gold. And gold is 27 % year to date, 6 % up from in two months, which is a lot. It's very strong. You could argue that it's an inflation protection It's also the fact that the US dollar is decreasing. So in a way,
currencies the gold didn't move that much it's just for dollar investor gold increased ⁓ as did Bitcoin ⁓ and for oil that's kind of the weird one to me because if you had like the bull market move on
more positive growth expectations. Why would oil go down? It's at $66 right now, but before it was more in the, well at the low, it was like $60, $58, which is pretty low. That's a little weird to me. This one.
Howard Chan (27:23)
I thought the Saudi increased their production a little bit that helped price this,
Dom Tersin (27:28)
yeah you're Saudi yeah but after you have the number of oil rigs decreasing
Howard Chan (27:38)
I think it points to, you know, increasing weaker economic activity. That's my base case, actually.
Dom Tersin (27:38)
So. ⁓
And the volatility movements. So we saw a lot of realized volatility during April and May, even before. But the implied volatility, the future volatility that is expected in the market, decreased back where it was at the beginning of the year. So the VIX index was 17 % at the beginning of the year. And it's back now at 17%.
The MOVE Index, is a bond, market volatility is even lower. That's a little...
with all the movements and realized volatility of the home market.
Howard Chan (28:28)
So if you went to bed the day before liberation day and you just woke up, you basically would say that the market hasn't really changed except for the fact that the dollar is a little bit weaker, gold is a little bit stronger, and the equity market is actually slightly up. So it's pretty incredible how the volatility swung all the way down and back up.
But this is also very interesting because in the last three episodes, we've been talking about how investors can use volatility in their portfolio. I think we should maybe do a round trip about how, at least our strategies we use as a lot of volatility have weathered this cycle, this almost full cycle
we should talk about how our strategies have actually navigated this full cycle. And the way that we think about it is there's generally a playbook that we think about. The first one is obviously when the announcement came out on liberation day there was a market sell-off. And in those types of environment,
what you want to do, you generally can't prepare for a sudden market sell-off is what you want to make sure is you actually sell off less than what the overall market is. And a lot of our strategies uses ⁓ short call positions, which actually decreases the sensitivity to the underlying. So if the underlying asset, let's say equity markets or single name drops by 1%, ⁓
we have about a sensitivity of 0.7. So meaning that for every 1 % drop, we only experience 0.7 % drop. that first leg, what you want to do is ⁓ preserve some capital, make sure you decrease the amount of sell-off relative to the market. And so that was really helpful. In some of the strategies that we run, we were able to
⁓ do better between 2 to 10 % of the strategy. And then the second leg is obviously once the market has its initial reaction, there's a lot of uncertainty. The market is trying to sort itself out, right? ⁓ In this case, in the Tariff War there was tariff announced, but the exact policy, the implementation, the responses from
reciprocal countries, those started to come in. So there was a lot of uncertainty. And then generally in those cases, the first thing to do is not to panic because you don't want to make investment decisions on ⁓ just on an impulse. And in those situations, we generally like to get paid while we wait. We want to wait until the fundamental sorts itself out. And this is where, ⁓ you know,
Dom Tersin (31:13)
And that's it. ⁓
Howard Chan (31:44)
Again, ⁓ being short vol helps us a lot because when you sell an option, you get a premium. And that premium is essentially income that you can generate. And it's especially ⁓ good in an environment of certainty because as volatility goes up, the value of the option goes up. So when you sell an option, you get more premium in those environments. And then the stage one and stage two, might switch
back and forth. So you could have a moment of sell-off, there's uncertainty, there's more sell-off, more uncertainty. And at some point when the fundamental kind of sorted itself out, you want to position your portfolio ⁓ for a rebound. And the rebound positioning has to be part of your construction because oftentimes the rebound, you can't expect it, right? In this case, during the tariff war
⁓ Trump says we're going to hold all tariffs for a while until we sort out that agreement and the market rebounded immediately. So being able to position those option positions ⁓ correctly, you can actually capture most of that rebound, if not all of that rebound from the underlying. And then the last part is
Once there's some sort of sense that risk appetite is coming back into the market, you want to magnify your upside. And there, again, we think using options and volatility can really help you in...
magnifying the risk that's coming back into the environment. Now there's now a lot of retail trading in options. So some of this, you could do it in your own account, but the thing that you want to be aware of is oftentimes, you know, the cost of the option when there's a lot of market uncertainty, ⁓ bid-ask spreads becomes wider. So execution is also pretty important.
Dom Tersin (33:30)
Ahem.
Howard Chan (33:49)
⁓ being able to pick the right amount of options that you use in your portfolio. Where are those strikes that you want to put in? If you want a long or short an option, whether it's call or a put, those decisions are pretty important. And it does take ⁓ years of experience to figure out and position correctly. And then lastly, you want to get out of the way.
when risk comes back into the market, right? You wanna be able to let the market do the work for you. So that also, ⁓ that sense of turnaround is also something that you have to watch out for. And I think, you know, the reason why more more people are using options is because it is quite capital efficient. ⁓ For a small amount of capital, you can get an exposure that is covers your portfolio. And you don't even have to
think about leverage, you can use a small amount of capital and then cover your portfolio that's not levered, but get the right exposure in your portfolio to be able to position ⁓ for all of these stages of the market.
So Dom, so now that we are through the first leg of this tariff war, ⁓ market appetite seems to be back in the market where, where we started the US and China are talking. The parents are talking now. So how, what's your outlook from here and how would you.
How do you think about Mark portfolio positioning from this point on?
Dom Tersin (35:32)
⁓
and equities.
Howard Chan (35:34)
on anything, all asset classes.
Dom Tersin (35:34)
Yeah. ⁓
I would, well I'm biased, non-US
Howard Chan (35:40)
but I think that is important because we do need to have different perspective in the market, right? Although much of this tariff war originates from the U.S. To be very honest, I think this tariff war is the beginning of the end of a unilateral
kind of world order where the power will have to be shared amongst really three regions of the world, the US, Asia, specifically China and Europe. And so having a non-US perspective actually I think is more more important because no capital markets operate in a vacuum.
Dom Tersin (36:26)
to me, the outlook will be for lower growth and maybe.
But the trouble is, it's a timing problem. When do you know there will be a recession, right? I don't know. So I would, well I'm more biased in the European equities because
I always find the US so expensive. PE higher than 25 is like, okay, super expensive, but lots of... ⁓
Howard Chan (36:58)
But let me challenge you that this is the one thing I never understood.
I know European stocks are cheap, especially relative to the US, right? But where are they going to get the growth?
Dom Tersin (37:10)
Yeah, I know. Growth is probably half the one of the US, so in a way you could argue that PE should be double.
Howard Chan (37:18)
Yeah, but also there are a lot of European companies sell into the US, right? ⁓ And I'm not so sure European companies are that keen with China. And so where is that extra growth other than productivity, which I always feel Europeans have this aversion to increase productivity. Where is that earnings going to come from?
Dom Tersin (37:27)
Yes.
Well that's why they are cheap. I see it as...
If you have a PE of 10, will it go lower? It's harder for a PE of 10 to go to 7 than a PE of 25 to go to 20, right? So that's what kind of a protection, you know, that's... Plus in Europe, there is more spending coming, thanks to Trump, actually. Yeah.
Howard Chan (38:13)
For sure the defense sector,
Dom Tersin (38:16)
But not only there will be spillover in infrastructures and probably in normal spending on everyday goods. So that's the way I'm thinking. In the US, I think I would probably do covered call in the US. That's what I would do. You know, like long term.
Howard Chan (38:42)
Yeah, I think I'm in line. I do think that the US underlying economic activity is slowing down. Whether we go into a recession by the full definition, which is two quarters of negative growth, I don't know. But definitely things are slowing down. ⁓ And so therefore, I would want to be more positioned on ⁓ consumer. ⁓
Dom Tersin (38:44)
you
Howard Chan (39:11)
staples. In our case, where we focus on technology, things that ⁓ people spend on a daily basis like ⁓
Netflix or music service like Spotify where that's probably the last place that people are going to cut. But I do think ⁓ our thesis about AI infrastructure continues to prove out correctly, right? A lot of these companies, the US companies are not only getting growth from within the US. You've just seen Nvidia and all these things are making
agreements in Saudi Arabia, elsewhere in the world, everybody needs this technology. So that's a growth driver. I think currency is going to be difficult for the US, especially some of this is self-inflicted wounds. I would stay away from long-term bonds. There's just too much fiscal challenges that even on headline news, right, that's coming down.
that continues to be a risk. Precious metals would probably be doing well. think all developed countries are trying to devalue their currency by borrowing more. So having hard assets ⁓ in gold, and then usually that means there's more attention on silver as well. Those would do well. ⁓
And I'm curious, what do you think about emerging markets? Do you think they're a beneficiary or kind of just a sideline on all of this tariff wars?
Dom Tersin (40:53)
I think they are beneficial in lower dollar. That's good for ⁓ the people who issue that in US dollar, like most of emerging markets. ⁓
and a lower dollar means lower commodity prices. So for the emerging that are not exporter of commodities, that should probably be good as well.
I like you now.
Howard Chan (41:21)
Yeah. emerging markets has always been, I remember in the 2000s, it's like the hot thing, the BRICS countries. And as they say, this is applied to Brazil, but probably true in a lot of other markets is that there's a country of tomorrow and always will be. Unless until they're not, I guess.
Dom Tersin (41:21)
Yeah.
Yeah, exactly. Yeah,
if you look at the emerging local bond ETF, I don't think they did anything in 2015.
Howard Chan (41:54)
Yeah, and they have higher rates, right? So they should, the yield should generate some returns, but ⁓ it's always a little bit disappointing. Well.
Dom Tersin (41:55)
But yeah, yeah.
But equities,
Howard Chan (42:07)
So I think there's still lot of uncertainties in the market, but wait and see, but there's definitely still sectors in the US and also in Europe that is attractive. So we'll end it there. So if you liked this episode, please subscribe and let all of your friends know. If you have any questions, please feel free to email podcasts@kurvinvest.com and that is...
podcast@kurvinvest.com. And we'll see you on the next one.
Recorded 4/23/2025.This material contains the opinions of the speakers, and such opinions are subject to change without notice. This content is not to be considered as personalized investment advice or a recommendation of any particular security, strategy or investment product.