Greed and Fear—How To Avoid The Whiplash and Sleep At Night

Israel–Iran War Headlines: Great for Clicks, Lousy for Timing

• Israel’s formal declaration of war on Iran and Washington’s call for Tehran’s “unconditional surrender” have lit up every newsfeed.
• Oil and the dollar jumped as expected—but Treasuries didn’t rally; yields rose on inflation fears. Equities dipped, then refocused on the Fed. Gold popped, then faded into the FOMC meeting. Bitcoin merely coughed.

Bottom line: Most of the “news” was priced in before retail investors could act. History shows knee-jerk trades in geopolitics are usually wrong-footed.

Why Geopolitics Feels Tradable—and Usually Isn’t

Investor rule: Watch, don’t chase. The S&P 500 typically recovers within six months of major geopolitical events.

Portfolio Discipline > “Fast Money”

• Binary outcomes, unknown timing, sentiment whiplash: the odds are stacked against headline traders.
• Missing the rebound is costlier than riding out a drawdown. A handful of big up-days drives most long-term equity returns.

Instead:

• Rebalance, harvest tax losses, stick to process.
• Never be afraid to sell winners because you fear taxes, but sell in non-taxable accounts to rebalance if possible.
• Diversify across assets that don’t move in lockstep—and stop watching every tick.

Fed Day: Powell’s Tightrope

• Dot plot says “higher for longer,” but the market still prices two cuts starting in September.
• Soft retail sales and CPI argue for easing; $75 oil argues against.
• Powell, in a potential final year, doesn’t want to be Arthur Burns or Paul Volcker.
• New Fed chair nomination being discussed.
• Candidate will likely support a higher inflation target—maybe 3%—and be open to lower rates.

Trade idea: Stay neutral duration (i.e., don’t structure your portfolio to bet on a rise or fall in rates); use options to express views around the September FOMC (so you just lose premium if you’re wrong).

Submarines vs. the Grid: The Labour Shortage No One Priced

• Pentagon may scrap a Virginia-class sub sale to Australia because it can’t find enough welders—those workers are needed to harden the U.S. power grid.
• Coding won’t fix a welding shortfall; chronic skilled-trade gaps are the new supply-chain risk.
• These are the “big moves” worth watching for shaping strategy.

Senate Tweaks to the “One Big Beautiful Bill”

• Still in flux, but early language paring back House's sledgehammer.
• Tighter construction deadlines for qualifying projects
• Sunset clauses that could eliminate certain credits by 2028
• Rollback of tech-neutral clean energy support, including nuclear and geothermal, for foreign-related entity involvement
• Carve-outs for energy storage
• Quick sunset of credit support for hydrogen and EV vehicles and chargers
• And a controversial 10-year ban on state-level AI regulations, tied to funding
• Senate softened the House bill in some ways, tightened it in others (45Z— extended eligibility period but no negative emissions rate)
• Lots of room to negotiate still, but the path is narrowing.

Another take. I am ambivalent about Alex Epstein because he is a little too convinced and a lot strident:

Market Tape

MacroMashup Playbook

1. Resilience over reaction – Stick to strategic weights; trim into strength, add on overshoots.
2. Watch skilled-labor bottlenecks – They’re the next supply-chain inflation driver.
3. Geopolitics ≠ Investment Thesis – Use it for risk scenarios, not trade triggers.

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Policy Paralysis or Calm Before the Storm? Markets Watch the Senate, Warily

Washington’s back in session and markets couldn’t be more bored. The Senate’s version of the One Big, Beautiful Bill trades blunt force for precision, thanks in part to Parliamentarian McDonough’s “Byrd Bath” rules, which require every provision to speak strictly to budget reconciliation. Her rulings may ultimately shape the bill more than party leaders themselves.

Senate Priorities Amid Los Angeles Unrest

With thousands of National Guard troops and Marines deployed to quell nationwide protests in Los Angeles sparked by aggressive federal ICE raids, the Senate is fast-tracking two controversial measures in the reconciliation framework:

• Medicaid for undocumented immigrants is being stripped from the package—cleanly excised under pressure to align the bill with budget reconciliation rules.
  
• ICE recruiter incentives are heading in the opposite direction: U.S. agents will receive $10,000 bonuses for meeting enforcement targets—an effort to bolster staffing amid rising political unrest.
  

Clean Energy in Limbo: Senate Holds the Balance

The clean-energy portion of the One Big Beautiful Bill hangs by a thread as the Senate prepares its version. The House’s version would sharply curtail key Inflation Reduction Act (IRA) credits—pulling IRA clean-credits like 45Y and 48E unless projects begin construction in 60 days and are completed by 2028, while slashing residential and tech-neutral incentives.

That rollback triggered swift backlash: bipartisan senators led by Utah’s John Curtis are urging relief—advocating phased timelines, credit transferability, and preserving support for nuclear and geothermal—even as fossil-fuel friendly Republicans push methane fee reductions.

Major tech players (Microsoft, Google, AWS, Meta) are lobbying to save clean-power credits critical for AI data centers. Meanwhile, over 175 mayors and local leaders cautioned the Senate that axing these incentives could jeopardize jobs, raise energy costs, and stall $14 bn in projects already planned.

Bottom line: Without Senate amendments—targeting start-date flexibility, rescued transferability, and maybe foreign-entity sourcing fixes—the clean-energy agenda risks collapse. And that means more policy paralysis, not progress.

Empire Wind Approved—Pipelines Quietly Resurface

In a quiet but telling trade-off, New York Governor Kathy Hochul has signed off on the long-delayed Empire Wind offshore project—a major win for clean energy advocates. But in the background, two previously blocked natural gas pipelines—Constitution and NESE—are now quietly advancing through state permitting channels.

Neither Albany nor Washington is calling it a deal, but the sequencing tells the story: offshore wind moves forward, and fossil fuel infrastructure gets a second wind.

The takeaway: In U.S. infrastructure, progress doesn’t always follow market signals—but political symmetry gets results.

U.S.–China Trade Talks Pivot to Swaps Over Sanctions

In a sharp departure from the tariff wars of years past, Washington and Beijing are quietly crafting a resource-for-access deal:

• China needs U.S. ethane to fuel its petrochemical and plastics industries.
  
• The U.S. needs Chinese rare earths for electric vehicles, wind turbines, and advanced defense systems.

The contours of the deal:

• China resumes rare earths exports.
  
• The U.S. loosens select chip and equipment controls.
  
• Visa restrictions for Chinese students and researchers ease.
  
• Beijing steps up enforcement on fentanyl precursor production.
  
  

The only thing missing? Signatures from Xi and Trump.

Markets aren’t waiting—they’re pricing in détente, not disruption.

A Shifting Global Order: Welcome to the Age of Monsters

Antonio Gramsci once warned, “The old world is dying, and the new world struggles to be born. Now is the time of monsters.”

That moment may be here.

• Multilaterals like the IMF, World Bank, UN, and WTO are losing authority as geopolitical fractures deepen.
  
• Globalism is in retreat, replaced by nationalist trade policies and mercantilist rhetoric.
  
• Populist waves are reshaping leadership across Europe and the U.S.
  
• Central banks face creeping fiscal dominance, their independence tested as deficits balloon and political pressure mounts.
  
  

The investor takeaway: This is no longer a market that responds to earnings or inflation prints alone. It’s a market reacting to regime change—political, monetary, and structural. Adapt accordingly.

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Market Takeaways: Stay Nimble, Avoid the Crossfire

Amid rising volatility and political noise, the smartest play may be to sidestep the ideological battles and focus on positioning:

• U.S. equities still anchor economic growth and help close the fiscal gap via capital gains and retirement distributions.
  
• Gold and Bitcoin are beneficiaries of dollar weakness and tightening liquidity.
  
• Precious metals offer asymmetric upside during regime shifts.
  
• And beware: Bearish narratives are often monetized—fueling trading volumes, subscriptions, and fear-based positioning.
  
  

As the main character, Gordon Gekko, famously said in the 1980s movie, Wall Street:

“If you want a friend, get a dog.” And remember, you don’t need to outrun the bear—just the guy behind you.

Central Banks Under Scrutiny: William White’s Warning

A former central banker himself, William White pulls no punches:

1. Inflation targeting is a slow leak, not a precise tool
   
2. Debt addiction has governments hooked on easy money
   
3. Models won’t save us—economies don’t operate like machines
   
4. Quantitative easing is akin to sugar—good short-term, bad long-term
   
5. Next step? Fed and other central banks must stay hawkish while urging fiscal stimulus—politicians must carry the fiscal torch

Market Update: Resilience in the Midst of Noise

• Stocks shrugged off early turbulence—cleared within weeks.
  
• Bond volatility (MOVE) and VIX spiked briefly, now calmed.
  
• Silver held firm—watch for:
  ‍
  
  1. Sustained $35–$40+ range.
     
  2. Potential short squeeze.
     
  3. High premium on physical supply.
     ‍
     
• Even Tesla rebounded from its X/IPO spat.
  
  

Reality check: Many bearish narratives serve brokerage and hedge fund fee revenue. But fundamentals? Strong balance sheets, low unemployment, business deregulation, and decent policy offsets suggest recession risks remain distant.

Narrative Busting

• CPI fell below expectations this week.
• Bond auctions— showing less stress: $120 billion priced in 3, 10 and 30-year at lower rates than pre-market.
• Tariffs: once inflationary, now increasingly benign.
• Rate cuts from Powell? Markets are virtually unanimous: “No” next week.
  
  

Final Word

Markets may be in a summer lull—but beneath the surface, tectonic shifts are underway. If you’re not navigating fiscal and political regime change with intent, you’re drifting. 

MacroMashup’s mission is to help you cut through the haze so you feel informed and confident about your investment decisions. 

Want to take even more control? Join our Fearless Investor Community launching in Summer 2025 here: https://neil-winward.kit.com/community 

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NVIDIA earnings took center stage. Powell stayed steady. Trump swung a hammer at clean energy. And bond investors in the U.S. and Japan are getting nervous for very different reasons.

Welcome back to MacroMashup—the sharpest 7-minute read in macro. No fluff. Just signal.

NVIDIA: The New Fed Day for Tech?

Forget Powell, Wall Street’s real Fed Day this week was NVIDIA’s earnings call.

• Revenue: $44.06B, up 69% YoY
  
• Gross profit: $26.7B (60.5% margin)
  
• Net income: $18.8B (including a $4.5B charge on Trump-era export restrictions)
  
• Data center growth: +73%

Markets treated NVIDIA as a proxy for:

• AI investment cycles
  
• Big Tech capex
  
• Global sentiment on semiconductors, especially China’s $50B AI market

Despite risks, implied volatility was down (-7.4%), well below historical norms (-11.4%).

CEO Jensen Huang = dynamic signal.

Trump = chaotic noise.

Powell = steady… but surprisingly volatile.

(86% of S&P rallies follow rate cuts. Powell drives more volatility than his predecessors.)

Not Everyone’s Impressed by Powell

Former Dallas Fed insider Danielle DiMartino Booth argues the Fed is already behind the curve:

• Recession began in Q1 2024 (according to her metrics)
• Bankruptcies now match 2008 levels
• Household delinquencies are spiking
• Credit conditions are tightening
• Small business sentiment collapsing

Her view:

• Rates must drop to 2%—now
• Fed should shift from lagging data to real-time metrics
• Delays risk systemic damage

One take? Yes. A smart one? Absolutely.

Are Tariffs Really Inflationary? Not Always.

The common narrative says yes. The data says… maybe not.

• Substitution & demand destruction keep prices in check
• Trump-era tariffs = short-term supply shock, not long-term inflation
• Goldman Sachs projects PCE inflation peaking at 3.5% in 2025, easing to 2.6% in 2026

But margins get squeezed. Labor takes the hit.

‍Breaking: The U.S. Court of International Trade just ruled that Trump overstepped his authority under the 1977 emergency law. Some tariffs will be unwound within 10 days.

Breaking (Part 2): A Federal Appeals Court allows tariffs to stay in effect…for now. Calling the Supremes.

Lousy Bond Auctions

Japan & U.S. Bond Investors are in a bad mood:

• The 20-year and 40-year JGB (Japanese Government Bonds) auctions (May 2025) saw the lowest demand since July 2024, amid concerns over fiscal sustainability.
• Yields surged: 20-year 2.56%; 30-year JGB yields hit 3.14%, while 40-year yields spiked to 3.6%**, all-time highs.
• The U.S. is worse: 10-year yields are above 4.5%, and long-term yields (20- and 30-year) jump above 5%.

Same result, different reasons:

Net International Investment Position (NIIP): Structural Divergence

• Japan = world’s largest creditor—owns $3.48 trillion more in foreign assets than foreign owns Japanese assets.
• U.S. = world’s largest debtor—foreigners own $26 trillion more U.S. assets than the U.S. owns foreign assets.
• It’s all about persistent trade surpluses for Japan and opposite for the U.S.
• Japan’s Debt/GDP ratio is way higher than the U.S., but adjusting for the NIIP…

Japan’s problem?

• Aging population.
• Policy uncertainty.

U.S. problem?

• Political gridlock.
• Lack of political will to fix the deficit.
• Running out of investors to buy its debt.

Bigger problem?

• Declining confidence in USD and fiat systems.
• China and BRICS are building BRICS Pay, which threatens the USD and SWIFT—it settles in 7 seconds.

Clean Energy Just Got Hit With a Sledgehammer

The House passed the One Big, Beautiful Bill—and it slashed many of the Inflation Reduction Act’s signature green incentives:

Clean Energy Production/Investment Credits:

• Immediate termination, unless construction starts within 60 days of enactment and operation by 12/31/28.

Residential/Commercial Energy Credits

• Expire for property placed in service after 12/31/25—ends third-party leasing.

EV Credits and Chargers

• Ends for most EVs and chargers after 12/31/25—limited exception for some EVs until 12/31/26.

Advanced Manufacturing Credit (45X)

• Phaseout by 2032.
• Transferability ends after 2027.

Clean Fuel Credit (45Z)

• Extended to 2031.
• Stricter sourcing and emissions rules.
• Transferability ends after 2027.

Nuclear Incentives (45U)

• Maintained/enhanced.
• No phaseout until 2031.

New "Foreign Entity of Concern" (FEOC) restrictions

• Limit foreign ownership and control in U.S. clean energy projects, primarily targeting Chinese involvement.
• Effective 1/1/26.

The bill now moves to the Senate, where substantial amendments are expected/hoped for—unless Trump can strongarm Senators too…

In the Markets: Who’s Right—Danielle or Darius?

Two respected voices. Two different reads on the economy.

Danielle DiMartino Booth

• Sees hard data turning south: bankruptcies, job losses, loan delinquencies
• Believes a recession already started
• Advocates for urgent cuts

Darius Dale

• Says soft data is noisy, but the hard data remains solid
• Sees fiscal and monetary stimulus holding the floor
• Follows a signal-based investment system, and puts money behind it

Lesson?

Without a system, you’re just reacting to headlines. And that’s a losing strategy.

If your only signal is your newsfeed or podcast queue, you’re trading blind.

Weekly charts + market data.

🎧 Want to hear both sides? We’ve linked Danielle’s and Darius’s latest interviews here:

How do you decide who’s right?

Darius Dale manages money, his own included, based on the signals his system provides. Here is his take.

Danielle DiMartino Booth advises money managers. Check out her viewpoints here.

Who Owes What To Whom

Market charts this week are largely “unch”: up, down, leadership changes, capital rotation etc.

This one, though, is worth a look. The blue line—massively negative at $26 trillion—is the net international investment position of the U.S. compared to the rest of the world.

America is truly exceptional…

Enjoyed this newsletter? Get Involved.

• Subscribe to MacroMashup: one email a week, zero noise.
• Watch us on YouTube, or tune in via Spotify / Apple‍
• Collaborate with us at contact@macromashup.com