$100,000 SALT cap madness & cut Medicaid ? / UST : 30y 4.97% / SPX 5900 ''re-hedge'' / Geopolitics & Trade deals!

Stéphan
3 days ago
5 min read

RELIEF following the tariff war de-escalation looks set to be quickly replaced by government budget tension
Talks downgraded...Putin, will he, won't he Meet Zelensky, doesn't look like it anymore, in fact Russian C Team turned up in Turkey...why...?...but one never knows till the weekend is over
Geopolitics & Trade deals are linked : Trump has ZERO appetite for protracted campaigns...the chance of the embargo staying for more than a few weeks was ZERO, as we said 3-4weeks ago, part of his speech on Tuesday was actually pretty good (listen below) >>>> if Trump wanted NK soldiers out of Ukraine=trade deal with China (China will speak to NK direct and get it done..), IF Putin meets Zelensky tomorrow in Turkey (Xi would have had a big say in approving this first, so US trade deal done first..), China critics of Europe have been toned down recently, China met LatAm countries few days ago ('aligning of interests'), Pakistan and India de-escalated too, even Iran nuclear talks are progressing (Trump : “I don’t believe in having permanent enemies. I am here to offer a more hopeful future for Iran.”), they all meeting tomorrow in Turkey too ! GAZA interesting, Trump had a go at Netanyahu, even Syria sanctions were taken away, (“Trump Tower Damascus'') >>> HUGE benefits, futures reconstruction deals, promises and orders for all those 30+ U.S companies that joined him on the trip!
Late yesterday...''U.S not seeking to weaken USD in trade talks'' ...very timely..
ECB's Nagel: There is a good probability we will get to 2% inflation target
Trump on India-Pakistan: "We I think convinced them to let's have peace and let's go and make trade deals. If we can make trade deals we like that much better than nuclear weapons."
NATO has quietly conducted one of its largest post-Cold War series of naval exercises, with over 50 ships simultaneously conducting missions in the Baltic, North Atlantic, Mediterranean, and Norwegian Seas
China’s manufacturing dominance has little to do with being “cheap” anymore. China’s labour costs are rapidly approaching developed economy prices, Things are made in China because they’ve spent 50 years developing infrastructure etc etc, India is cheap not China now..
Oil fell after NBC reported Iran is willing to forgo nuclear weapons in exchange for US sanctions relief (BBG)
Tariffs : so we went from end of the world stuff, market meltdown, millions of Americans working in a T-shirt factory, tariffs will plug the $2trn budget deficit and pay for getting rid of tax on tips, and little kids can only have 2 dolls instead of 30....to 'the deal is done', markets right back up, yet tariffs still on highs of the last 70y and in reality its the concept of a deal (as per Trump himself), and tax cuts will increase debt by some $3-4trn, thus 30y near 5%....so it's all good from here ? >>> watch long-end UST's !!
Trump wants $100,000 SALT cap for individuals and a $200,000 one for married couples, Currently, there’s a $10,000 limit on the federal deduction on state and local taxes, known as SALT, which will expire Dec. 31, 2025, without action from Congress >>> The Ways & Means draft would cut taxes by $5.3 TRILLION if made permanent -- $6.3 trillion worth of tax cuts and $1 trillion of offsets. Even counting all the expiration, it would add $3.8 trillion to the deficit after offsets.
SPX500 >>> re-hedge, reduce risk...''sell in May and go away'' at 5900 area #timestamp >>> a lot of good news & positives outcomes priced in + tariffs still very high + trade deals are actually 'trade concepts' ! and 30y is at 5%...
FF futures pricing in exactly 2 cuts for 2025 now
#USD Important piece by Brad Setser on how Taiwan (like many other economies) has controlled its external imbalances through aggressive currency intervention in order to support polices that lead to imbalances in its internal account