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Capital Flows

@Globalflows

Oct 13 • 14 tweets • 5 min read • Read on X

How Are Tariffs Impacting Positioning and The Macro Regime 🧵

Is this a one-time volatility spike or the beginning of something larger?

Mapping the macro regime and its connection to tariffs sets the stage for everything moving into the end of the week 👇

If you have been following me for any period of time you know that I have been bullish stocks and neutral bonds on a cyclical basis. This is being driven by the credit cycle, procyclical monetary+fiscal policy, and the entire wall of money from AI.

https://x.com/Globalflows/status/1976433580722245991

Was I long stocks going into Friday? Yes, 100%. If I had known the tariff news was coming out or that degree of a move would take place, I would have put on a short-term hedge.

https://x.com/Globalflows/status/1976433580722245991

I took a drawdown but as I laid out in the report on Friday, I remain bullish. These type of tariff shocks continue to create positioning unwinds as opposed to fundamentally changing the macro forces in the regime. The fact that everyone in the trading community is so aware of the tariff dynamics now after Q1 further decreases the probability of us having a Q1 like event driven purely by tariffs.

x.com/Globalflows/st…

https://x.com/Globalflows/status/1975269297380589790

The period of time we are in right now remains incredibly bullish from a cyclical perspective. I laid out all of this in the video here:

https://x.com/Globalflows/status/1975269297380589790

https://x.com/Globalflows/status/1976048759034479055

And in the bigger picture report here:

https://x.com/Globalflows/status/1976048759034479055

WE ARE NOT SEEING FUNDAMENTAL CHANGES IN THE MACRO DRIVERS OF THE CREDIT CYCLE.

This is very clear!

https://x.com/Globalflows/status/1977212030219436345

With that being said, understanding the connect of tariffs and macro liquidity will be THE KEY to map how any risks from tariffs impact markets. This is what I laid out in the report here and I want to cover several important things:

https://x.com/Globalflows/status/1977212030219436345

First, in the report I noted" This collective obsession is distracting from the most significant risk in the global system: cross-border flows. Tariffs are tied not only to trade relationships and geopolitics, but also to HOW MUCH capital foreign investors can allocate to US equities. This core misunderstanding explains WHY tariff headlines trigger equity selloffs and HOW they reshape global liquidity flows. (Chart below shows foreign direct investment into the United States)"

x.com/Globalflows/st…

This is why understanding the mechanics of liquidity as they connect to tariffs is critical

THis is not about valuations. This is 100% about flows of capital. Valuations do not set the upper limit of equities; it is the constraints of liquidity that push capital into equities.

https://x.com/Tyler_Neville_/status/1977520804829990914

After the short term volatility blow out from Friday, we have snapped back almost completely in the index.

https://x.com/Tyler_Neville_/status/1977520804829990914

We had a liquidation of positioning that mean reverted in the next trading session within a macro regime that is pumping money into the market. This is very bullish.

I remain bullish on equities and broad risk assets. The key thing to map will be how the rotations around macro changes and positioning develop, especially with some risks building in Japan right now (notice JGBs are rallying right now)

I will be breaking down this connection further in a report today for subscribers here: capitalflowsresearch.com

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More from @Globalflows

Capital Flows

@Globalflows

Oct 6

CAPITAL IS MOVING OUT THE RISK CURVE 🧵

Capital is steadily migrating out the risk curve because policy and liquidity conditions continue to incentivize it. With nominal rates still below nominal growth and abundant liquidity across both fiscal and monetary channels, investors are being pushed toward assets that offer incremental yield or growth exposure. The real cost of capital remains deeply negative when adjusted for inflation expectations, and that creates an environment where holding cash or short-duration paper guarantees underperformance in real terms. The incentive structure is clear: move into credit, equities, and alternative assets to preserve purchasing power and capture upside in a reflating economy.

Short end real rates continue to fall and reflect this:

This is the mechanical essence of the “There Is No Alternative” (TINA) effect. When real returns in safe assets are structurally suppressed, capital seeks higher-yielding risk assets by necessity, not preference. The equilibrium becomes self-reinforcing. As equities rally and credit spreads tighten, portfolio managers experience both absolute and relative performance pressure to rotate further into risk. Passive inflows magnify the dynamic as benchmark weights shift toward outperforming sectors.

This is why low quality companies are rallying right now:

However, the constraint is also fundamental. This regime only persists as long as inflation remains stable enough to keep long-end yields anchored. If inflation expectations rise meaningfully, real yields turn positive and duration risk reasserts itself. Higher long-end rates lift the entire discount curve, repricing risk assets and tightening financial conditions. The same liquidity that now fuels a melt-up would then accelerate the unwind.

Read 6 tweets

Capital Flows

@Globalflows

Oct 5 Read 13 tweets

Capital Flows

@Globalflows

Oct 2

The biggest risks to equities are building under the surface on a structural basis

The current liquidity flows are sowing the seeds for the future crash, which is why understanding positioning and HOW HIGH macro flows can push us is CRITICAL

Here is a full breakdown 🧵👇

The regime is clearly characterized by expanding growth, procyclical monetary policy AND fiscal policy.

What does this mean? It means we have every major line item and element in both the economy and market pushing capital out the risk curve which means equities MUCH HIGHER

Notice that credit spreads are at cycle lows while there are a lot more upgrades than downgrades in credit ratings

Notice that net outlays from the government is increasing while the Fed is suppressing short end real rates:

Read 22 tweets

Capital Flows

@Globalflows

Sep 30

YOU CAN'T INFLATE DEBT AWAY 🧵

The lazy narrative: “The Fed will just print money and inflate the debt away.”

That is not how the system works.

At the core: the Fed’s liabilities are not legal tender. They are bank reserves.

Start with the basics:

Money is an asset liability web. Every financial asset is someone else’s liability.

Your deposit = your bank’s liability.
A Treasury = your asset, the government’s liability.

The Fed is part of this system, its liabilities sit inside it, not above it.

What are the Fed’s liabilities? Bank reserves.

These are fuctionally deposits that commercial banks hold at the Fed.
Reserves are not circulating cash. They cannot pay wages, settle groceries, or extinguish household debt.

Read 10 tweets

Capital Flows

@Globalflows

Sep 29

HOW DOES BALANCE SHEET FRAGILITY CONNECT TO THE MELT UP 🧵

The economy is never static.

It is a constant rotation of balance sheet dynamics.
Companies expand balance sheets on the upside and shrink them on the downside.

This cycle of leverage and deleverage is the fundamental mechanism of survival in markets.

On the upside, competition forces companies to borrow.

If one firm issues debt to fund expansion, rivals must follow or lose market share.

Debt becomes a weapon for growth.

Balance sheets expand together and credit fuels the boom. (We are in the melt up right now)

On the downside, the same companies are forced to deleverage.

Revenues shrink, cash flow tightens, and survival takes priority.

Assets are sold, costs cut, debt paid down.

This is not optional. It is the price of making it through the downturn.

Read 13 tweets

Capital Flows

@Globalflows

Sep 29

WHAT IS MONEY? 🧵

Money is not a thing.

It is a web of promises: assets on one side, liabilities on the other.

Your deposit is the bank’s liability. A bond is your asset and the government’s liability.

The entire monetary system is an accounting framework of IOUs.

This is why there is no single definition of money.

Cash, deposits, repo, even money market funds all function as money in different contexts.

What matters is confidence in the chain of promises.

Every promise carries two forms of risk:
• Duration risk: time destroys value as inflation and rates erode future claims.
• Credit risk: the borrower might not pay back at all.

Read 12 tweets

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