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Something For Your Espresso: Is Ballooning Debt Just Another ‘Hoax’ Like Climate Change for Trump?

Similarly to launching his meme coin, Trump’s focus remains fixated on short-term wins at the expense of long-term stability. Why should ballooning debt be any different when immediate gratification is the priority?
2025-01-22

Good morning from Copenhagen,

It’s shaping up to be an incredibly upbeat day for high-beta assets, with several major developments driving optimism.

First, Trump is hosting meetings focused on tax cuts, which could lead to more growth-friendly policies. Markets love any hint of fiscal stimulus, so this is already fueling some excitement.

Second, there’s been a massive announcement of over $500 billion in AI investments. That’s a huge number, and it shows just how much AI is becoming a priority for both policy and business. This kind of focus on tech innovation is bound to spill over into other sectors, especially semiconductors.

And finally, the big one: potential progress on a deal with China. The latest buzz suggests this could involve big-tech companies, especially with all the recent noise around TikTok. Any movement toward resolving trade tensions, especially with China, is a big deal for global markets and sectors tied to tech and supply chains.

All of this makes semiconductors look especially interesting right now. They already have the highest beta to ISM Manufacturing, so they’re highly sensitive to any uptick in economic activity. With AI investments, potential trade breakthroughs, and renewed talk of fiscal stimulus, the setup for semis looks really bullish.

Chart 1.a: Semiconductors appear to be emerging as winners as the business cycle gains momentum.

Similarly to launching his meme coin, Trump’s focus remains fixated on short-term wins at the expense of long-term stability. Why should ballooning debt be any different when immediate gratification is the priority?

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