I spent much of the last week meeting with investors of all stripes. The overarching theme of the conversations was confusion - no one knows what to make of the whirlwind of announcements, proposals, and rumors. Here are some rapid-fire takes on some of the recent deluge - happy to jump on the phone if you want to discuss any of them further, or any that I skipped.

1) Mar-a-Lago Accord: It's hard to know what to make of this, because the details are squishy at best. One of the cornerstones appears to be to give foreign government US bond holders the "choice" to swap into 100-year bonds with no coupon payments (in an effort to reduce the impact of our debt burden), or figure out how to live without any US military support. My view on that is 1) deficits aren't going anywhere anytime soon, and in fact will probably get worse with the current mix of policies and proposals 2) when governments need a lot of demand for an asset, and lowering the price isn't palatable, they often resort to carrots and sticks (mostly sticks). Wartime bonds in the US carried a subtext of "lend us money at low rates or learn German." Operators of SOEs in China are sometimes presented with the choice to buy equities or look for another job (or worse). During the GFC banks were "encouraged" to absorb each other. So I think it is plausible they will try this...with unknowable and potentially disastrous second-order consequences.

2) OPEC+ Announcement: Very curious - basically no forecasters (ourselves included) expected them to go through with their plan to return barrels starting in April. OPEC+ has been clear that they pay close attention to global inventory levels, and with inventory levels low they apparently have decided that implied demand is strong enough to absorb the supply. We (and most others) think they are being overly optimistic about demand and the market will be in steady oversupply in the second half of the year. Still, we think this is a much more plausible explanation for their decision than "Trump told them to" but also one that isn't going to age well if we are right about the next bullet point.

3) US Recession Odds: Much higher than the market is discounting in equity pricing, vol pricing, rates pricing, or surveys. It looks to us like a long period of strong US growth has the market complacent on how quickly the stats have turned and how much chaos tariffs and DOGE are already baking into the cake. We have been very bullish on US growth for the last couple of years, but we now believe the evidence points to a >50% chance of at least one negative quarter of US growth this year. Meanwhile, Europe and China have started easing and their economies are improving from low levels. YTD this has shown up as 10-20% outperformance from European and Chinese equities relative to US stocks, a trend we expect to continue...yet US retail is historically overweight the US vs global equities. Stay safe out there!