Can anything stop the US economy?

Summary

Podcast Summary: Unhedged - "Can Anything Stop the US Economy?"

Episode Details:

• Title: Can Anything Stop the US Economy?
• Host/Author: Financial Times & Pushkin Industries
• Release Date: June 26, 2025

In this compelling episode of Unhedged, hosts Rob Armstrong and Aidan Rider delve into the surprising resilience of the US economy amidst a barrage of potential headwinds. Despite facing numerous challenges—from soaring interest rates to geopolitical tensions—the American economy continues to demonstrate remarkable strength. This summary encapsulates the key discussions, insights, and conclusions drawn by the hosts, enriched with notable quotes and precise timestamps for context.

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1. Introduction: Setting the Stage

The episode opens with a brief advertisement snippet from Rob Armstrong of Pjum, emphasizing active risk management in investments. Shortly after, Aidan Rider introduces the central theme:

Aidan Rider [00:36]: "Inflation, high interest rates, an AI bubble, bad sentiment, tariffs, a lousy housing market, and most recently, war. This year the United States economy has faced all of those things and kept on ticking."

Rob Armstrong adds:

Rob Armstrong [00:36]: "Today on the show, what does it take to slow down the American economy?"

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2. Interest Rates and Economic Stability

A significant portion of the discussion centers around the rapid increase in the federal funds rate from near zero to over four percent within two years—a move that many anticipated would precipitate a crisis.

Aidan Rider [01:20]: "Two years ago the federal funds rate went from basically zero to basically four. Four plus. And we're still at four plus."

Despite these hikes, the economy has not crashed as predicted. The hosts reflect on the period marked by inflation and microeconomic scares, such as the collapse of Silicon Valley Bank:

Rob Armstrong [01:55]: "Inflation's bad… we had some hissing noises and some creaking but the machine didn't break."

This resilience is further highlighted by the stable unemployment rate:

Aidan Rider [02:38]: "We never went into high unemployment… around four and a bit percent unemployment rate economy."

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3. Sentiment Indicators and Political Impact

The discussion shifts to consumer and corporate sentiment, particularly following President Trump's election, which saw a downturn in public and international sentiment towards the US economy.

Rob Armstrong [04:30]: "Every signal from sentiment was flashing red."

Despite negative sentiment across demographics and sectors, the broader economy continued to grow, outperforming peers in the developed world. The hosts emphasize that low unemployment rates and sustained consumer spending have been pivotal.

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4. The AI Boom and Market Reactions

Aiden and Rob explore the role of the AI sector in buoying the stock market, noting initial fears of an AI bubble were short-lived.

Aidan Rider [03:28]: "We thought, we're going to fall off a cliff here when people realize you don't need to spend all this money. But that rut lasted maybe a day and a half."

This section underscores the market's ability to absorb and adapt to technological advancements without succumbing to speculative excesses.

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5. Geopolitical Tensions and Energy Independence

The conversation addresses ongoing Middle Eastern conflicts and their limited impact on the US economy, attributing this stability to the shale boom.

Aidan Rider [12:01]: "One thing that really made a big difference that has helped the American economy is the shale boom."

The US's position as the world's leading oil and natural gas producer has insulated it from global energy shocks, allowing markets to "look through" regional conflicts without significant disruptions.

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6. Household and Fiscal Health

A key factor behind the economic resilience is the strong household balance sheets, a legacy of post-Great Financial Crisis financial behaviors.

Aidan Rider [10:39]: "The US household balance sheet in aggregate has been very good. So the consumer is not leveraged out of the years, and that really helps support the economy."

Additionally, government fiscal stimulus during the COVID-19 pandemic provided a safety net that prevented household debt from becoming unmanageable:

Aidan Rider [10:53]: "The government sent everybody a bunch of checks… none of these shocks… has really shaken loose the American households, good balance sheets and propensity to spend."

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7. Immigration and Labor Market

Rob highlights the role of high immigration rates in maintaining economic stability by supplying labor to a burgeoning economy.

Rob Armstrong [11:37]: "You had really high immigration that made the break even… keep things a little bit cooler than they otherwise would have been."

Aidan concurs, noting that immigration helped prevent wage inflation from spiraling, thereby sustaining economic growth.

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8. Future Risks: Deficit Spending and Financial Engineering

Shifting to potential threats, the hosts express concern over the US's reliance on deficit spending and the sustainability of its fiscal policies.

Aidan Rider [17:54]: "The US is addicted to deficit spending… at some point, the people who are lending the money demand to be paid more for doing so."

Rob echoes these fears, pointing out the longer-term implications of persistent budget deficits and the possible rise in treasury yields:

Rob Armstrong [17:20]: "There is a longer term trend. It might not be absolute chaos, but it is concerning."

They discuss emerging financial strategies, such as adjusting bank regulatory ratios to allow more treasury holdings and the involvement of stablecoins in treasury markets, which may mask underlying fiscal vulnerabilities.

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9. The Role of the Corporate Sector

Despite fiscal concerns, the strong performance of the US corporate sector offers a buffer against economic downturns.

Aidan Rider [20:06]: "We still have the best corporate economy in the world. It's an incredible engine of prosperity… the corporate economy will get you out of trouble."

This optimism is tempered by uncertainties surrounding tariffs and their potential impact on the broader economy.

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10. Concluding Insights and Market Outlook

The episode concludes with a balanced view: while the US economy has demonstrated impressive resilience, underlying fiscal challenges and external uncertainties pose significant risks. The hosts advocate for vigilance, suggesting that while the current strength is notable, it may not be indefinitely sustainable.

Rob summarizes:

Rob Armstrong [15:15]: "The market hasn't been able to recover in the last month because the US has just proved itself over and over again."

Aidan adds a cautious note:

Aidan Rider [16:33]: "This might not be sustainable."

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11. Long and Short Segment

In the lighter "Long and Short" segment, Rob shares his newfound appreciation for guavas after an impulse buy, while Aidan humorously critiques persistent bullish research on Citigroup, expressing skepticism about repeated positive forecasts.

Rob Armstrong [22:11]: "I was in the grocery store… I saw guavas. I don't particularly like guavas, yet I still bought the guavas."

Aidan Rider [22:18]: "I have been reading literally that exact research note for 20 years… whatever happens with Citigroup, I wish them well, but it’s different this time."

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Final Thoughts: Unhedged provides a nuanced exploration of the US economy's strengths and vulnerabilities. While celebrating factors like low household debt, robust corporate performance, and energy independence, the hosts remain wary of fiscal imbalances and geopolitical risks. This episode serves as a valuable resource for investors and enthusiasts seeking to understand the complex dynamics sustaining the American economy in turbulent times.

For more insights and detailed analysis, subscribe to the Unhedged newsletter or listen to future episodes.

Transcript

[Rob Armstrong]

At pjum, we actively manage risk today while targeting outperformance tomorrow. So no matter what investment risks concern you most. From geopolitics to inflation to liquidity, PGM brings disciplined risk management expertise that spans 30 market cycles. Our active approach finds opportunities and volatility, helping our clients to navigate risk and achieve their long term goals. Pjum, our investments shape tomorrow today.

[Aidan Rider]

Pushkin. Inflation, high interest rates, an AI bubble, bad sentiment, tariffs, a lousy housing market, and most recently, war. This year the United States economy has faced all of those things and kept on ticking. Today on the show, what does it take to slow down the American economy? This is unhedged, the markets and finance podcast from the Financial Times and Pushkin. I am Rob Armstrong coming to you from the center of the universe, New York City. I am joined by the other half of the Unhedged newsletter, Aidan Rider.

[Rob Armstrong]

Good morning.

[Aidan Rider]

How did we get here, man? So I mean the thing that's most amazing to me looking back is like two years ago the federal funds rate went from basically zero to basically four. Four plus.

[Rob Armstrong]

Four plus. We're still four plus.

[Aidan Rider]

Yeah. And we're still at four plus. And everybody, us included, is thinking this is going to be bad. At some point you have some kind of crisis when you have that big, that quick increase in interest rates, something's gonna crash.

[Rob Armstrong]

Yeah. There were definitely bad things in that period.

[Aidan Rider]

Yes.

[Rob Armstrong]

Right. Inflation's bad.

[Aidan Rider]

And we did have little micro scares. We had the Silicon Valley bank and a couple of other banks blew up, but the machine didn't break. There was some hissing noises and some creaking but the machine didn't break.

[Rob Armstrong]

Yeah. I mean the steadyship us kept on sailing.

[Aidan Rider]

Yeah. No, so that's incredible. And of course that came in the footsteps of which was a whole nother challenge.

[Rob Armstrong]

Yeah. I mean it had a lot of societal and political impact for sure.

[Aidan Rider]

Yes.

[Rob Armstrong]

But in terms of the broader US economy, it continued to chug.

[Aidan Rider]

It certainly cost the Democrats the presidency.

[Rob Armstrong]

Yes. And a lot of pain and a lot of families that we shouldn't, that we shouldn't overlook.

[Aidan Rider]

But measured as a whole, the economy charged through that and ahead of all.

[Rob Armstrong]

Of our peers in the developed world.

[Aidan Rider]

Yeah. And we never went into high unemployment. I mean that's the ultimate statistic for the economy were a kind of four and a bit percent unemployment rate economy. Still other horrors. I remember you and I thinking in January that when Deepsea came out and it had made this for like $12, it had made an AI model that was as good as what Google and Microsoft had or appeared that way. And we thought, good Lord, the AI boom is what is supporting both the stock market and the magnificent seven share prices, and to a real extent, the real economy. Because people were shoveling billions on top of billions into data centers and chips and Nvidia and everything else. And we thought, wow, we're going to fall off a cliff here when people realize you don't need to spend all this money.

[Rob Armstrong]

Yeah. But that rut lasted maybe a day and a half.

[Aidan Rider]

Yeah. It's funny, we were. I remember, we're like, okay, we wrote it. We wrote this in a note. Okay. We're going to listen to first quarter tech results and they're gonna tell us they're cutting their data center budgets and they're reorienting towards something else. Nope, nope. Armstrong and Reiter. Wrong again.

[Rob Armstrong]

It seems like a streak.

[Aidan Rider]

Okay, then while all this is happening, President Trump gets elected and more than half of the country, companies, consumers, investors decide everything is terrible. I mean, it is a partisan effect, but not totally. And so all our measures of sentiment fall through the floor.

[Rob Armstrong]

Yeah. I mean, like, near historic lows. And sentiment falling across the board, not just among Democrats and independents who might not like tariffs or the Trump administration. It's Republicans, it's wealthy people, poor people.

[Aidan Rider]

Yes. The whole gambit and company surveys where people are like, how is business? They're, like, getting worse, actually.

[Rob Armstrong]

Yeah. Every signal from sentiment was flashing red.

[Aidan Rider]

Red, not, not orange, red, red, you know, and when it's the CEO surveys and the corporate capital expenditure expectations surveys and the hiring expectation surveys, this is the stuff that scares you. Yeah, right. Not like asking Joe Six Pack on the street, how are things? No, I know Joe. He's a grouchy bastard. You can't get a nice word out of him. But, you know, when. When the companies are saying this, it's a huge deal.

[Rob Armstrong]

Well, we should throw on top of, you know, when tariffs hit and consumer sentiment bottomed out, so did international sentiment around the U.S. everybody's like, sell America. The U.S. is done. We're not going to buy U.S. equities, we're not going to buy treasuries.

[Aidan Rider]

And there was serious talk about whether one of the main underpinnings of the US Economy, which is the other flip side of our big trade imbalance, is a capital flows imbalance. Those two things have to match. The money has to come from abroad to fund our spending. Our crazy big deficit, our crazy big deficits in America. And there was a real worry that that wasn't going to happen anymore.

[Rob Armstrong]

And we started seeing signs of that as we've talked about on this podcast before in the market. I mean, like very concerning signs, right? Dollars and yields breaking their correlation. Everybody's selling off stocks in theory.

[Aidan Rider]

Yeah. And there was a lot of comments and some actual numbers that suggested international portfolios were rebalancing away from the United States. And ultimately if that happens, if it's more expensive to finance our deficits with money from abroad, that causes a serious problem for America's economy. While we're sitting here talking about shocks, it would be weird. Not to mention the fact that we have a very bad housing market. We had an awful new home sales number yesterday. And existing home sales are terrible too, because everybody who has a mortgage more than five years old isn't going to sell. So we've got an economy where one of the most important aspects of it, which is what people spend on buying, renovating, owning, selling houses is basically not working. And then while we're worrying about all this stuff, the Middle east goes to war.

[Rob Armstrong]

Yes, it does. And not just the Middle east, the US comes straight in.

[Aidan Rider]

Straight in. And all that isolationist talk. I mean, Janan Ganesh had a great column about this in our newspaper this week that basically point out, remember all that talk about how America is an isolationist. Well, there's these 14 B2 bombers that have a disagreement with that fear thesis. And that's like, you know, Middle Eastern wars. That's an issue for the world.

[Rob Armstrong]

Yeah, I mean, it's an issue for the world. We should note that markets have pretty much ignored the prospect of Middle east.

[Aidan Rider]

Wars for a while now. Markets ignoring is of course the topic of this show. So let's shift to that. Why is it possible that the largest and most important economy in the world can take these like Mike Tyson punches to the face, a series of them, and still be at 4 something percent unemployment rate? Still we're hearing great things from companies about profits. Margins are high. The markets of course, are perfectly sanguine about all of this. How is this possible?

[Rob Armstrong]

Yeah, well, we should note that there was a period of market disruption and concern immediately after tariff.

[Aidan Rider]

Yeah, yeah. Liberation Day tried to ruin everything. My point. And it almost worked. But it didn't work.

[Rob Armstrong]

It didn't work. And we wrote yesterday that you can kind of see there's like this turning point in mid May where some of the old market paradigms kind of reassert themselves. The market is climbing steadily, not super fast, slowly. It's actually approaching its all time high again. Yeah, Yields are finally behaving.

[Aidan Rider]

Yeah, that. And of course, I'm glad you mentioned that because I think that is the most important statistic. All of this stuff happened. And for the last couple of weeks, US treasury yields, 10 year, 2 year, 30 year, whatever, are falling.

[Rob Armstrong]

Falling. But at the same time as equities are rising. So bonds and stocks are actually correlated.

[Aidan Rider]

Yes.

[Rob Armstrong]

Which was what broke apart after Liberation Day. Then on top of that, the dollar is now sliding alongside falling yields, which is normal. Which is normal. Which was not what was happening. What got everybody concerned in the month after Liberation Day.

[Aidan Rider]

Yeah.

[Rob Armstrong]

This kind of started sometime around mid May.

[Aidan Rider]

Yeah.

[Rob Armstrong]

And there's not a clear cause, as you're intimating here. The cause is just like the markets have learned that the US Economy is super resilient and can look through a lot of these panics.

[Aidan Rider]

Yeah. It's kind of worth re emphasizing that point that you just made, that the thing that the moment of fear was the moment when you had rising treasury yields and a falling dollar at the same time.

[Rob Armstrong]

Totally.

[Aidan Rider]

Because usually when the treasury yield rises, money comes to the United States to say, oh, that's a good yield. I'll take some of that. And that money coming in, of course, has to change into dollars. That forces the dollar exchange rate up. When that doesn't happen, when the. Basically the credit rating of the United States as expressed by the treasury yield is getting worse and the dollar is getting worse too, that's a bad sign. And that has turned around. But let's return to the question of why the American economy is as resilient as it is. And I think what I would nominate as the most important single factor is that we came into this as crappy as the government's balance sheet might be. And we probably should have emphasized among the trouble, the fact that we have this budget right now. And we'll get back to that. But the household balance sheets came in very good. That since the great financial crisis when everybody tried to buy three houses in Las Vegas all at once and got hopelessly over leveraged, the US household balance sheet in aggregate has been very good. So the consumer is not leveraged out of the years, and that really helps support the economy.

[Rob Armstrong]

Yeah. Just looking right now at household debt service payments as a percentage of disposable personal income. So how much of your income are you spending on your debt? Yeah, it's still below where it was.

[Aidan Rider]

Before COVID And of course, the fact that the government sent everybody a bunch of checks.

[Rob Armstrong]

Yes.

[Aidan Rider]

Only improved people weren't paying money for.

[Rob Armstrong]

Paying for things for a while. Right. They were kind of stuck at home and, you know, buying stuff on Amazon, but not spending as much money as they would otherwise.

[Aidan Rider]

So there's a lot of complaints, I would say, to be made about how much the Trump and Biden administration spent, basically wrapping the US Economy in cotton wool. But we have experienced the benefits over the last year in that none of these shocks that have occurred has really shaken loose the American households, good balance sheets and propensity to spend.

[Rob Armstrong]

Yeah. And, you know, I think another piece of the equation, especially in the last four years in the Biden administration, of why the US Economy was resilient was immigration.

[Aidan Rider]

Yes.

[Rob Armstrong]

Right. You had really high immigration that made the break even. You know, jobs number higher. It means we had a lot of people to throw at the problem of this hot economy.

[Aidan Rider]

Yes.

[Rob Armstrong]

And keep things a little bit cooler than they otherwise would have been.

[Aidan Rider]

Yes. We might have been in a worse situation with inflation.

[Rob Armstrong]

Way worse because wage inflation would have been gone way, way up. So that helped us weather a lot of the storm. Of course, that's kind of ending now.

[Aidan Rider]

Yeah.

[Rob Armstrong]

And we'll see what that implies for the economy in the coming years.

[Aidan Rider]

I mean, the counterargument is that very high immigration has caused a lot other social problems and so forth, and so that's all out there.

[Rob Armstrong]

And inflation in the past four years, even with the economy being quote, unquote, resilient, there's all sorts of other social problems that have gone along with the quote, unquote, resilient U.S. economy.

[Aidan Rider]

But from the kind of macro statistics level, immigration kept us out of hot water. Yeah, absolutely, that's really true. Okay, so we have a relatively unleveraged consumer, and we have some immigration flows that kept inflation under control.

[Rob Armstrong]

We have a pretty big fiscal impulse. That's sort of what we're getting to with the Trump and Biden administrations wrapping the US Economy in wool. Yeah, right. But I mean, it flows through to everything. If you have a government spending in the economy, a government that's growing at the same time, and, you know, rates are still high, you are able to support liquidity in the markets, you're able to support liquidity within the broader the economy. You know, it allows you to keep things chugging.

[Aidan Rider]

So in some kind of broad Keynesian way, the government did its job as the source of demand of last resort. Now, all of that is suggestive of a future problem. Right. You can't deficit your way to prosperity. But let's, let's put that aside for one second. And we'll talk about that shortly. One thing that really made a big difference that has helped the American economy is the shale boom. Yeah, right. You know, we are. We've talked about this on the show quite recently. We're now the world's biggest oil producer, natural gas producer. That doesn't just insulate us from the troubles in the Middle East. That insulates the whole world from the troubles in the Middle East.

[Rob Armstrong]

Yeah. It's a global market.

[Aidan Rider]

Right. The Middle Eastern oil nexus is just less important than it was. So a little war between a couple of countries in the Middle east is just a much less big of a deal than it would have been even 20 years ago.

[Rob Armstrong]

Yeah. It is really astonishing how markets are able to really look through Middle Eastern troubles. Right.

[Aidan Rider]

Yeah.

[Rob Armstrong]

I mean, the market panicked a little a few times the past two years as Israel has fought both internally and with its neighbors. But the market essentially learned to shrug them off and the oil market learned to shrug them off.

[Aidan Rider]

Right.

[Rob Armstrong]

Iran, we thought, would be the exception. Iran is a huge oil producer and crucially, it controls the Strait of Hormuz.

[Aidan Rider]

Yes.

[Rob Armstrong]

Yeah. If they'd shut the Strait of Hormuz, which was theoretically on the table, I don't think the oil market could have ever looked through 20% of the global, you know, daily consumption. That volume goes through the Strait of Hormuz every single day. Because if you look at a map. Right. It's how all the ships get into Saudi Arabia and to Iran and a lot of the Gulf countries. So the market could look through that. But shockingly, even when Trump bombed Iran, which would theoretically invite their retribution or would theoretically pull the US Into a longer war in the Middle east, which would have implications for the US Economy and the markets. Markets not only didn't care, The S&P 500 went up the day after.

[Aidan Rider]

Yeah, Yeah. I mean, it's just important that the war didn't turn into a disaster. Like on the tree of possibilities that we were looking at, we have landed on a very benign branch so far, knocking on all available pieces of wood.

[Rob Armstrong]

Yeah.

[Aidan Rider]

You know, we. We seem to be in a calm place.

[Rob Armstrong]

I think the broader picture we're sketching is the reason the market hasn't been able to recover in the last month is because the US has just proved itself over and over again. And I think the same policy applies to the US Economy itself. Right.

[Aidan Rider]

Yeah.

[Rob Armstrong]

Once you prove you can outperform US exceptionalism or whatever else you want to call that. Yeah, it's self reinforcing.

[Aidan Rider]

Self reinforcing. And it's especially self reinforcing on the market side of the economy.

[Rob Armstrong]

Exactly.

[Aidan Rider]

Yeah, I think that's a really important point, that the real economy and the market are not really all that separate. There is causal interplay between the two.

[Rob Armstrong]

They're separate, but they are separate.

[Aidan Rider]

And the real economy is obviously the more important part. But a market shock can cause an economic shock and obviously an economic shock can cause a market shock. And this incredible buy the dip mentality that has taken hold in US Markets, that whatever happens that shocks the market, the smart thing to do is to buy it while it's low.

[Rob Armstrong]

Yes.

[Aidan Rider]

That is a kind of economic shock absorber as well as a market shock absorber because you don't get that feedback loop going between the stock market, the bond market and the real economy.

[Rob Armstrong]

Yeah. But you know, as the resident pessimist of the unhedged people, I feel like we have to acknowledge that like, yeah, this might not be sustainable.

[Aidan Rider]

Okay, good, good thing to say. Let's talk about the future now. We've talked about the past and all the shocks, we've talked about the present, meaning why things are still so strong. Now let's talk about the future. I'm going to give you the stage to be Mr. Pessimist, which is your role in the, both the newsletter and the podcast. What's, what's scaring you today, Aiden?

[Rob Armstrong]

What isn't scaring me today? So let's start with the American exceptionalism piece that we just spoke about. As we said, it's self reinforcing. It's a huge benefit to the United States. A lot of people were concerned that Trump's tariffs and, you know, all those actions were going to be the beginning of the end of American exceptionalism. We think that was definitely overhyped for the month of April and May. Right. If you look at data from the Fed equity inflows, so people buying US equities from abroad were still relatively high and actually rising.

[Aidan Rider]

And bond inflows didn't collapse.

[Rob Armstrong]

They didn't.

[Aidan Rider]

They weren't, they were weak.

[Rob Armstrong]

They were weak. And there were two weak treasury auctions, but they continued around flat to a little bit up. It wasn't, it wasn't catastrophe, but it takes long time, especially for foreign pension funds, foreign banks who buy the bulk of U.S. treasuries to pivot away.

[Aidan Rider]

Yes.

[Rob Armstrong]

So I mean, this could be the start of a longer term trend. And most people we've spoken with who are very well versed in this are convinced that there will be a longer term trend. It might not be absolute chaos, but it is concerning. It's drip, drip. And especially for a country that runs these huge deficits.

[Aidan Rider]

Yes.

[Rob Armstrong]

Who needs to have cheap financing? It's concerning.

[Aidan Rider]

Okay, that's point. Here's the optimistic counterpoint. Please. The optimistic counterpoint is where. Where else you gonna go, people? You wanna put your money in Europe, I wish you good luck. You wanna put your money in Japan, I wish you good luck. You want emerging markets, I wish you good luck. I just don't think the alternatives are there. I'm sticking with Tina on this one. There is no alternative.

[Rob Armstrong]

I think that there's probably no alternative right now, but I think there's a case to be made for all three of those things you just mentioned, Japan, Europe and EMs to rise in the coming years for a variety of reasons.

[Aidan Rider]

I'll believe it when I see it. Now, the thing that worries me, as we intimated before, the US is addicted to deficit spending. And at some point, the people who are lending the money demand to be paid more for doing so. The US budget becomes unmanageable, treasury yields spiral up, and we are forced as a country either into austerity, like growing up and having a more balanced budget, which would cause a recession and a market crash, in my view, or we are forced to inflate our way out of our trouble or use some other wicked financial trick to get out of our trouble.

[Rob Armstrong]

Yeah.

[Aidan Rider]

And we are playing chicken with that right now with the budget negotiations that we're having.

[Rob Armstrong]

And we're starting to see some, like, fringe financial engineering starting to take place. So we've written a lot about the supplementary leverage ratio.

[Aidan Rider]

Yes.

[Rob Armstrong]

Which essentially broader bank.

[Aidan Rider]

Allows banks to hold more treasuries.

[Rob Armstrong]

Yeah, yeah. There's this new regulation that's adjusting this bank regulatory ratio that is allowing banks to hold more treasuries.

[Aidan Rider]

Yes.

[Rob Armstrong]

On top of that, you have the genius act, which is getting stablecoins to hold more treasuries. I mean, there's a lot of things that are starting to happen around the fringes. Countries could come to bite us.

[Aidan Rider]

Countries that have financial trouble, one thing they standardly do is they try to trick private sector institutions into owning more and more of their debt. And unless you are Japan, that tends to end badly.

[Rob Armstrong]

Yeah. And who's to say if it would end badly here? Also, there's plenty of arguments for why you would make some of those adjustments that are not, you know, nefarious.

[Aidan Rider]

Yes.

[Rob Armstrong]

But it's something to keep an eye on.

[Aidan Rider]

Okay. That is the. That is the pessimistic point. And I will give you the optimistic counterpoint. We still have the best corporate economy in the world. It's an incredible engine of prosperity, American companies. And if you make even a modest adjustment, the American economy can grow its way out of a lot of trouble.

[Rob Armstrong]

Totally.

[Aidan Rider]

You don't have to be a saint fiscal wise. You just have to be less of a sinner and then the corporate economy will get you out of trouble.

[Rob Armstrong]

My one word counterpoint is tariffs. We don't know what will happen with tariffs.

[Aidan Rider]

Correct.

[Rob Armstrong]

We don't know where they'll be that will flow through to the economy itself.

[Aidan Rider]

Yes.

[Rob Armstrong]

And there's so many rumblings about what will happen.

[Aidan Rider]

I was trying, Aidan, to end on an optimistic point. We had to set tariffs, but you just refuse.

[Rob Armstrong]

We had to. We had to mention. I completely agree with you, but we had to mention tariffs.

[Aidan Rider]

I want listeners to know that Aiden sits over on the other side of this table and there's like a little cloud over just his head that it's constantly raining. It's sunny over on this side of the table. And we will be back after a short break with long and short.

[Rob Armstrong]

Bonds are back and so is all the credit. PGYM Fixed Incomes Monthly podcast series. From the latest trends to long term perspectives, you'll get timely fixed income insights from leading economists, research analysts and investment professionals. Whether you're new to bonds or a seasoned investor, tune in to all the credit wherever you get your podcasts. This podcast is intended solely for professional investor use. Past performance is not a guarantee of future results.

[Aidan Rider]

Listeners, welcome back. This is Long and Short. That section of the show where we go long things we like and short things we don't like. Aidan, you complain so much in the body of the show that I'm sure you have something. You are long.

[Rob Armstrong]

Yes, I am long. Impulse grocery buys.

[Aidan Rider]

Ooh.

[Rob Armstrong]

I was in the grocery store near me. I saw guavas. I don't particularly like guavas, yet I still bought the guavas.

[Aidan Rider]

Yes.

[Rob Armstrong]

And last night I made guava jelly. And I'm very happy.

[Aidan Rider]

I think you are in the world capital of the impulse grocery buy. There's so many ethnic grocery stores in New York City that there is food you've never seen before crosses your path all the time. And I agree with you. Just buy it. I am long. The Citigroup buy note. I was going through my inbox this morning and I there was a research note from another large bank saying Citigroup finally has its stuff together and it's going to start catching up to the other banks and profitability and markets are going to love it again and you're going to make a lot of money owning the stock. I have been reading literally that exact research note for 20 years from the day I entered finance. And so whatever happens with Citigroup, I wish them well. I hope this note is correct, but one thing I am telling you is that the Citigroup by note, it's different this time will exist as long as Wall street exists. Listeners, we will be back in your feedback next week. Until then, stay cool. Unhedged is produced by Jake Harper and edited by Bryant Urstadt. Our executive producer is Jacob Goldstein. We had additional help from Topher for his Cheryl Brumley is the FT's global head of Audio. Special thanks to Laura Clark, Alistair Mackey, Greta Cohn and Natalie Sadler. FT Premium subscribers can get the Unhedged newsletter for free. A 30 day free trial is available to everyone else. Just go to ft.com unhedged offer I'm Rob Armstrong. Thanks for listening.