Bob Elliott Profile picture
CIO at @UnlimitedFnds | PM of $HFGM & $HFND | Fmr IC @Bridgewater | Described as one of the few "sane" voices on #fintwit | Comments are not investment advice
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Jun 2 11 tweets 4 min read
The current 15-20% tariff rate is starting to bite. The ~40bln in May duties under current policies suggests the tariff drag is a ~2% of GDP tax hike on the US economy.

Unless brought down soon (thru courts, deals, etc), it's going to start hitting the economy soon.

Thread. After months of speculation about what duties will be implemented, we are finally starting to fully see the impact of tariff policies in the government cashflows data. Today the blended rate stands at around ~17.5%. Image
May 30 10 tweets 3 min read
The major US indexes are already pricing in a high chance that admin policies wont disrupt the underlying global economic momentum and improving liquidity at this point.

But it's not in many other markets. Those may provide better risk/return opportunities ahead.

Thread. If the US economy is set to run hot, probably the most notable mispricing is in short rate pricing which is still reflecting a couple cuts through the end of the year. Without weakening employment it's unlikely these cuts will come. Image
May 29 9 tweets 3 min read
The global easing cycle continues.

Over the last year 80% of the most impactful global central banks cut rates and nearly all are biased to deliver further cuts. But unlike many past cutting cycles, it comes with decent global growth and loose financial conditions.

Thread. Overnight news of the BoK cuts and RBNZ further easing earlier this week continues a broader cycle of cuts over the last year from the vast majority of global central banks. Really only Brazil stands out as pursuing restrictive policy. Image
May 27 12 tweets 4 min read
Immigration has collapsed since the new admin took office, and with it a key source of new demand and labor supply bolstering growth in recent years.

The '24 surge of 2.4mln work permits (1.4% of the labor force) is now reversing, creating an acute growth drag ahead.

Thread. Anytime I talk about such a politically charged policy shift there will inevitably a pile of comments about whether the policy is good or bad.

That doesn't matter a lick for macro investing. What matters is simply the mechanics of the impacts of those shifts on the economy.
May 23 15 tweets 5 min read
Japan has a much bigger problem with growth than with inflation these days.

While CPI numbers make for clicks, surging rice prices are a key driver and services inflation is softening rapidly. With GDP already weak before the trade war, easy money is here to stay.

Thread. The latest inflation reads out overnight reaffirms that the inflation rise is being driven by supply shocks and not by an overheating of the underlying economy. On a SA basis headline has been basically flat over the last 3m. Image
May 22 10 tweets 3 min read
While all eyes are on the expansionary Big Beautiful Bill, there are increasing indications that the tariff "pause" may end in something closer to a Liberation Day 2.0 than relief.

Thread. From a macro perspective the tariff policy outcome is far more important than the nuances of the big beautiful bill.

Even with the China "deal" a couple weeks ago rates are still quite elevated, with the question ahead of whether further relief comes or we revert back. Image
May 21 16 tweets 5 min read
The Canadian economy was already in a malaise and is now quickly deteriorating with a recession on the horizon.

Plunging business conditions, weakening employment, and the rolling over of the critical housing market all point to the need for further easing ahead.

Thread. The Canadian economy has been weak for many years even before the recent concerns about the trade war. GDP per capita has been flat for a decade, and is only modestly above pre-GFC levels. Image
May 20 14 tweets 4 min read
The Chinese economy is hanging in there even with the heightened US trade war.

Even as US pressure ratcheted up, hard economic measures across production, demand, investment and housing aren't showing signs of much stress.

Thread. Earlier this week we got broad reads of hard data on economic conditions post liberation day & pause (which was actually very bad for China).

Through this reporting period China faced max tariff pressure. h/t @JosephPolitano Image
May 19 12 tweets 4 min read
The run on developed world money continues.

While many are focused on the Moody's downgrade as a catalyst pushing yields higher, it is far from just a US dynamic. Long-term bond yields are pushing to highs across the developed world.

Thread. Since very few economic transactions happen on the very long-end of the yield curve, those bonds are best thought of as a view on the long-term value of money rather than economic conditions.

Investors are increasingly concerned about whether today's yields are a good deal.
May 14 12 tweets 4 min read
HH spending remains the primary driver of the US economy, and timely data shows it keeps on trucking even as wage growth softens.

Keeping it going requires a continued push higher in asset prices, which is likely on track thanks to expansionary policy ahead.

Thread. Tomorrow we get the retail sales numbers for April which will give some insight into how the consumer navigated spending just after Liberation Day. More timely measures suggest it remained pretty strong.

Redbook stable: Image
May 13 13 tweets 4 min read
The admin is shifting to stimulation mode before the US inflation problem has been resolved.

Most measures of inflation remain elevated before the juicing that's to come, giving the Fed little reason to cut further anytime soon.

Thread. The US inflation problem has yet to be resolved. Core inflation has stabilized at elevated levels and the average print of the last few months have if anything ticked up. Image
May 12 15 tweets 3 min read
The CHN/US tariff cuts were much larger than most expected.

I didn’t predict the policy shift and didn’t try to. That reflects much more remaining disciplined to my edge than a reflection of skill.

Some thoughts on being comfortable being on the wrong side of a call.

Thread. I’ve been doing this a long time and over time have learned that when it comes to federal government policy (in contrast to the Fed), I have much more edge in understanding the consequences of the policy vs what is priced in than predicting what policy will come.
May 12 11 tweets 4 min read
While all eyes are on tariff negotiations, House '26 budget plans solidified last week suggest a Republican commitment to blow out the deficit in coming years.

The Ways and Means bill would not only extend the TCJA, but add 1.5-2tln in deficits over the next decade.

Thread. So far the new admin has done little to reign in spending despite all the discussion about DOGE in the first few months. Not all that surprising given congress extended '25 spending at current law. Image
May 9 12 tweets 4 min read
It increasingly looks like the best case scenario on tariffs will be roughly the 60% China and 10% all others, amounting to a roughly 15% hike in overall tariff rates.

While there was a lot of hoopla about the UK deal, more than anything it solidified this path.

Thread. The UK "deal" announced yesterday largely had the same terms as on Liberation Day and the "Pause" - the 10% across the board remained largely in place.

May 6 10 tweets 3 min read
The consensus believes the trade war will have no impact on growth or earnings ahead.

It's the type of setup that is skewed for disappointment.

Thread. In the medium term markets are typically driven by how macro dynamics come in relative to expectations. While its a little more boring to focus on expectations, its important since those expectations are baked into the current prices of assets.
May 5 10 tweets 4 min read
The data gives cover to Powell's Fed to keep rates on hold despite the admin's pleas for more cuts, making it up to the next chair to deliver the cutting cycle so desperately desired.

And yet, the short rate markets are pricing in the exact opposite path right now.

Thread. The unemployment rate remains the biggest factor in the Fed's decision to shift policy. The report last week showed continued stability. The UE rate has been at the same level since last summer's scare. Image
May 2 14 tweets 5 min read
The US labor market is already showing signs of weakening even before the full effects the admin's negative growth policies show up in the data.

The income-driven expansion is looking increasingly fragile.

Thread. While today's jobs report will get a lot of attention, we already have a pretty broad based read on employment conditions. And in short, its looks like things are weakening.

ADP continues to soften since last summer: Image
May 1 14 tweets 6 min read
The BoJ had little reason to hike before the trade war started, and even less reason now.

Inflation remains subdued outside of rice prices and growth remains tepid even before the new admin's slew of higher duties dashing hopes for a more rapid tightening.

Thread. An aggressive Japanese tightening wrecking the global economy has been a FinTwit favorite for years now. As regular readers know, I've faded that view for years b/c the underlying macro dynamics just didn't line up. Here when Ueda started back in '23:

Apr 30 13 tweets 4 min read
Consumer demand overall looks steady even as sentiment has plunged.

Every timely read of spending data indicates no downshift in total household consumption in Apr, suggesting that the March numbers we see today for PCE are a decent proxy for the read on spot demand.

Thread. Today's GDP report is going to be a mess as a surge in imports will likely create distortions in the top read.

As a result its much better to focus on the end demand numbers particularly from households. And further focus on the more timely personal income and spending report.
Apr 29 11 tweets 5 min read
Tariffs lead to higher prices for consumers and businesses.

Despite the admin's claims to the contrary, the flood of tariff-driven price increases is now starting. While biz are holding off as long as they can, if tariffs remain in place more price hikes are coming.

Thread. As the tariff policies spun up the admin made the case that tariffs would be largely be paid for by foreign producers rather than domestic wholesalers and consumers. With the largest tariff hike since Smoot-Hawley (even with the pause) that view is being put to the test.
Apr 28 12 tweets 4 min read
Chinese policymakers continue to take a tough stance on extreme US tariffs.

Refusing to negotiate, official accounts openly mocking the US, and today publishing a revisit of Mao's "On Protracted War" all point to little desire to give in anytime soon.

Thread. The US extreme tariff regime has all but created a trade embargo on Chinese goods coming into the US at this point.

While China has moderately reduced its reliance on exports to the US, at 400-500bln, its still 2-3% of Chinese GDP, creating a notable economic hit. Image