YouSaid · the spoken record

Eric Wallerstein

lines on the record: 73
first: 2026-03-11
most recent: 2026-03-11
sittings or episodes: 1
sources: podcast

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“Kind of stupid. I don't know. If they have a new Accord, fine, but like, I don't know what functionally changes. So yeah, I don't know. It's, again, gets a lot of clicks, but it doesn't, there's no like meat on the bone there.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“I think it's overblown. You know, I think if you were worried about fiscal dominance, that happened when we started adding liquidity every time the basis trade got screwed up. Frankly, the basis trade and like negative swap spreads are a function of the deficit and issuance. So it's not exactly like, it has nothing to do with the treasury and the Fed. It's just a function of the debt. So I think you're probably too late to the game if that's what you're worried now Also, I think that whatever the Fed's balance sheet decisions are, Treasury can always offset So, like, I don't see where Going to happen, like absorb our issuings, like markets would be repriced. We already kind of do. Like an implicit need to fund debt by pushing liquidity into the system so hedge funds can like do maturity transformation from bonds bills or overnight stuff.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Basically, doing what DMO does at Treasury. The issue and strategy should be theirs. And we should be mindful of it and the effects that the balance sheet has, but ultimately they should be able to control that. It's a little more of a political decision. So frankly, it's moving away from politicization as opposed to moving towards it. But they don't get credit for that. Other stuff that makes headlines.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Know, like, if you're matching assets and liabilities, it makes sense to have shorter term assets. You get kind of barbell it. So you have long duration stuff, probably from a crisis where you're doing QE. And then mostly bills, and then you're finding a wham that's kind of in the middle there closer towards treasuries, you know, outstanding debt. If you want to get away from allocation decisions like allocation and credit provision to the economy and deciding where that goes, you should try to be as neutral as possible. So I think there's an air to it and they'll just run MBS into bills and find that balance. I would caution against conspiracy theories about moving towards all bills. Just shouldn't be”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I mean, I think it's going to happen, it'll be passive, it'll be in the background. I think it's, I don't know if it's overly important, but it's important. So like we're replacing MBS with bills right now, the issue is bills are like 5% of the Fed's balance sheet. That's just too low. You could make theoretical arguments they should be 100% to better match the liabilities, which are overnight. So, I think it'll grow passively closer to 20%. I think there's an argument to be made that it should be closer to half bills with the understanding that future shocks would then lower that ratio.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I just have been trying to figure out what's the premise for more this talk coming about, how much of a priority do you think it is for the Fed? Because in reality, it seems all well and good to try to match the duration of the Fed balance sheet to the Treasury and return to this pre-08 duration profile of the Fed balance sheet. But you get one crisis. One, even right now, like an oil shock or what have you. And that leads to recession. And then suddenly QE's back on the table. So I'm just curious how much credence do you give to that framework? How important do you think it is and how likely it is it to actually be executed on?”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“If they hike by 25 bits, great. I don't think it matters. Like, who cares? I do think ultimately the next five to 10 years, as you get more bank lending to, you know, like CNI loans and you get more hard, tangible, physical infrastructure, monetary policy will transmission will pick up. So like whereas the hikes this time around did less damage because A, like we all refinanced B, like companies just weren't that dead like a SaaS heavy economy isn't going to be so susceptible to like rising interest rates. I think ultimately like if you have a hiking cycle in five years, that might be much different like a real 150 to 200 bips 300 bips hiking cycle. I think that actually causes the like recessionary dynamics that people expected time around. Economy's changing, but reasons for optimism.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Not entirely sure. But frankly, I don't know if it matters. I don't think 50 BIPs in either direction matters. I think it way more matters that we can get banks lending and get like the supply side shock or capital deepening, whatever. And ultimately, that will help. I think if you avoid, this is a more of a holistic point, but the more you avoid shocks and like unforeseen black swans like COVID, GFC, whatever, the better growth is for the long run, right? The less volatility, the better it is. So if you have like an improved supply side and you have like for national security or supply chain reasons broadly and it's more insulated from pressure, you should just be better off longer term, less susceptible to these issues. So I don't know. I'm like cautiously optimistic, which is not my baseline. If they get 75 bits of cuts, great.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Cliff, you know, for longer. So, in terms of what it means for the Fed, like, you know, in some ways it does raise the neutral rate. In other ways, it like depresses the neutral rate, like where that balance is out between the build out and between like disinflationary productive growth.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Know basically automatic stabilizers or stimulus help those people, but like you need that productivity growth. We're all worried about social security, Medicare, Medicaid. We're worried that death to GDP is going to be too high and that interest expense is going to take over. This is the kind of thing that solves that. We have like our demographic picture just like East Asia is really bad and inverted. Same with Europe. If you don't have immigration, like you kind of need productivity to offset dependency ratios keep continuing to deteriorate. Know, I think if we find that middle ground between AI is a dud and it's like the dot com bubble and like AGI solves the universe, it's fantastic and it's like how it's it's honestly the story of how US exceptionalism just continues for like 40 more years and we just like avoid the fiscal”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Been a really SAS consumer driven economy. Ultimately, I kind of agree. And like, I think the whole AI thing, the fears that we had earlier this year or like literally three weeks ago, it didn't really make sense to me because ultimately if you have that kind of productivity growth, like you're improving this massive, massive fiscal issue that we have, like debt to GDP actually falls. You kind of offset it. You get real growth without unit labor costs rising and you have real wage growth. And then frankly, like the US has, it would benefit our corporate tax base, right? Like we would see those accrue to treasury. So you have more space for like.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Know as opposed to just labor, right? If your labor capital relationship is improving, you're going to get better productivity, right? And like data centers doing better or operating doing more with less is a form of productivity. Companies being less enthusiastic about hiring, but continuing to do out, like get more output and grow earnings is a form of productivity. So it looks like productivity is accelerating. It looks like it bottomed and it's going up. You have more like supply side, capital deepening. If banks are lending again in CNI loans and whatever, that's all good. That's all good for productivity. And we haven't really built anything important for the past 20 years. You know what I mean?”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Sounds great. You should do comms for the Fed That was good. No, listen, I think it's possible. It's definitely a path. It's a little bit of a nirvana path. A lot of things going right. But I think that's the goal, right? And you can ultimately have a North Star and then Bob and Leave along the way Will AI generate a ton of productivity growth? Maybe, maybe not. It can also just inherently drive productivity. So”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Can get to this regime where we get commercial banks lending again. We get them to be the marginal uptake of activity in that respect, pull the Fed out while seeing a positive growth impulse for the economy. How do you think about that thesis?”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, fully agreed. I think that X between M2 and velocity, it's something I've been thinking about a lot. I'm going to throw a thesis about how I've been thinking about this so far. I'm curious, like, yeah, let me know, poke some holes on it. But it's like, okay, Warsaw wants to come in. He's a believer of AI productivity. He thinks that we should probably cut the Fed funds more than what's priced right now. And then at the same time, we want to deregulate the banks, SLR, risk weighted capital ratios, that sort of thing. get commercial banks to start lending again. At the same time that we remove the Fed from being the only game in town. And during that process, if Fed funds comes down, did you really like the banks, you know, start to get them lending again? We might see a steepening of the yield curve, which makes it also a creative for banks to lend out and be more active with their loans, putting that all together, it seems like you can get to this, you know, it's a bit of a tightrope, but it feels like...”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Deserves start to fall for like three months and you panic and you call it quiz. Planning here would be nice, and I think that's something we can look forward to.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Also, it's not like he's an outsider saying this stuff. Like, he knows how it works. You know what I mean? And he was there during the crisis. So he's very attuned to the worry, like the issues with if you break funding markets, right? Yeah, just like, I think people are going to complain no matter who gets in the seat. Like, everyone complains about Powell every other day. Yet if you ask someone, like, was he a good central banker? Like a lot of people will say like, yeah, it was fine. You know what I mean? I don't know. I would have done better. At the end of the day, like, I think he's hopefully going to do things smartly. It'll maybe take a couple years to actually drain the balance sheet a bit, but it's much better than just saying, let's do Qt. Reserves don't fall because RRP just absorbed it for like two years.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“If there is no difference between three and three and a half or three or 2.8 trillion dollars of reserves other than, oh no, repo rates might start to creep up. Does it really matter? Like, I don't think money velocity has been so crimped for the past 15 years. I don't think banks want to earn IORB on like $100 billion or $500 billion of reserves. Like they want to go be banks and make money doing that and make more money. So yeah, I think like Ultimately what you want to do is encourage money velocity to pick up as opposed to just pumping M2 and watching money velocity fall. And if you look at that chart like M2 versus money velocity, since the GFC, it's been like literally like a supply and demand curve. They look like they're reimversely correlated.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“I think the stress testing thing was also great, giving basically okay, you do a stress test, you now have two years to plan as opposed to one. I think there's a lot of things they can do, but I don't, it just doesn't.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Shrinking the balance sheet is fine as long as you again do bank d reg, retailer that understand who is absorbing treasuries and how that works. So I'm not that worried about it. I think he's a great fit for the job. I don't know what people wanted. Like what was the hope? I think you're super qualified, obviously. I think he makes a lot of great points. And like pre-08, it worked just fine. Yes, 08 happened, but also like COVID happened. And there was a huge dash for cash. And again, the repo market broke. So it's not like we solved the repo market in between scarce reserves and abundant. Is he going to go to scarce reserves? So, if you ease up on those and also on bank supervision, where they basically tell banks we prefer reserves over otherwise comparable forms of HQLA. If you pull back on that, over time, banks start to adjust.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I mean, it's funny because I feel like almost everyone on the street or in finance also agrees that QE had tons of unintended consequences. And also this latest round during COVID was too much. We've expanded into asset allocation across like buying corporate bond issuance at auction or on a secondary market. Like we've really like gotten and passed the core mandate and everyone has that belief and then someone who is going to go be a policymaker echoes it. They have the same view. They've had it for years. Then we get scared, you know, like that's very odd to me. I don't see the concern there. I think ultimately.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“And I think this siloing of bank supervision regulation from monetary policy for the past 15 years has been pretty stupid. And I think finally, and Governor Myron Grave, a fantastic speech about this, we're thinking about the intersection of those two and how it actually affects monetary policy implementation. Because like, yes, it is not QE, but ultimately adding $40 billion of reserves a month does affect monetary policy. Like that is monetary policy, right? You don't want to be doing that because like the basis trade is an issue. So I think finally, finally, finally, thinking about these two issues in unison and how they intersect Will help structurally repair these issues.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“It's not getting to the right people. I mean, I think a great step would be to do central clear. I think the BOC is actually moving towards this, but would be to do central clearing for the SRF, which is an SEC thing that industry already started moving to. I want to say like half of repos is centrally cleared anyway. But basically what it allows banks to do is net two repo trades, like basically the repo trade on one side of their balance sheet and the other one. You can like net the margin and basically not allow your balance sheet to expand so much. You just don't get punished by requirements. Like you're not getting hurt by regulations, which is crazy because ostensibly those regulations are there to support financial stability. And then they physically disallow banks from lending in repo markets, which is who should be lending, not the Fed. So then they go to like, and they're not going to go to the Fed if they're then counting against their liquidity requirements. So like, it's counterintuitive.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“I mean, SRF is great. I don't think it's been effective though. It's great in theory. It's just hasn't been effective. And I think we're too quick to throw up our hands and say, oh, well, there's stigma. What are we going to do? How do we get rid of stigma? Which was a discount window thing. And somehow we allowed stigma to arrive at the SRF. They have now two operations, one in the morning, one in the afternoon. Again, it doesn't address the fact that banks don't need the funding, right? Like it's ultimately the funding needs to get the hedge funds. Those are who pulls sofar up in the distribution. Like TGCR or like where GC repo trades is much lower relative to where the upper band of sofa is being pushed. You have trades like 50 bips outside of the range. Like that's crazy. And another repo operation or like a bigger larger cap at the SRF is just not going to fix that because ultimately like this is not.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Day to day swings in month to month to month swings and reserves, you'll just allow more, you won't get so much funding market stress and volatility all the time. You'll be able to manage it much, much easier and therefore allow aggregate reserve levels to drop. And just like free banks up to like be banks, you know what I mean? So I think I'm optimistic about change. Like, sure, things can blow up, but like things nearly blew up in Q4. And that was when we had ample reserve. So I'm super optimistic. I think banks turned a corner a year and a half ago and especially a year ago, like from over-regulation to moving in the right direction. And I think having a new Fed share will only help that accelerate. So I'm super optimistic about that.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Actually, first, my first and foremost worry is always financial stability, and I just think the pendulum went from too loose probably before the GFC to like way too tight and it's caused its own pendulum. So we're more so tailored, like retailering and right sizing where we are in the regulatory regime. So I think if you're worried about shrinking the balance sheet, that's probably misplaced. And frankly, from a sequencing perspective, you have to like loosen bank regulation first, which A helps with the absorption of Treasury debt, but B just like helps get more money out there. Like hoarding reserves in each QLA prevents the transmission of liquidity to the real economy. And so I think honestly, it's a bit of a nominal growth impulse, which is not the way most people think about shrinking the balance sheet and QT. But ultimately, if you do it by helping alleviate bank balance sheets, empowering the desk in New York to actually manage.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Pretty stupid, in my opinion. I think, you know, Kevin will come in and I think has a great perception of how the Fed works. And hopefully, like, I think also Vice Chair for Supervision, Mickey Bowman, has already been starting on this for the past year or two. I think easing up on capital requirements is great. They'll start easing up on liquidity requirements. That's great. And it's not even easing up.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“We got through it. There was kind of a lack of planning, it seems like, with ending QT and then starting RMOs, but they were probably necessary. But ultimately, I think they were just papering over a structural issue. Like nothing's been solved from 2019 or 2018. You just continuously have basically hedge funds are primary trading firms pull the distribution of repo rates much higher. Bank balance sheets are still quite constrained and you just have the same cycle where like sulfur prices off basis trades and then And things go to shit pretty quickly. Like, it's just, you can see it for like a month or two or three months. And like, it's not like it happens overnight. You just see it and then non-linearly it just accelerates and then you're in a bind and you have to add liquidity.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so I mean, I think the decision to NQT and then restart reserve management operations was prudent and necessary. Like I think honestly that like the month of November was quite scary because Repo is trading pretty far outside the target range. Not that you're targeting repo, but I think like we kind of narrowly avoided a spike in repo rates that would have been significant and like would have caught mainstream media headlines. And, you know, people, like regular people would have been talking about like funding market trusts, which is never a good sign.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“I think that's also a really interesting opportunity for not growth funneling out of the US, but funneling up. And I think ultimately if you have FDI going, you'll have currency appreciation in LADAM. But then ultimately portfolio flows will seek some geographic diversification. I think some of that's going to go there. You'll get FDI, but you also get like equity investment. You know, like if there's more stability, whatever. So I mean, like it could be the next five, 10, 15 years where it's like a renaissance for this region, really.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“I shouldn't mention specific things, but that's, you know, they're kind of getting charters from the OCC Getting Fed Master account, I think, for Kraken, or who was it? So, I think you're seeing a change where, like, they used to not even be okay with a narrow bank, and now you're seeing more openness. So I think a really, really interesting opportunity for FinTech and LADM is you can actually expand into the US market. Like there's just a natural overlap between consumers in people you bank in Mexico and then people you bank across the border. And I think that will be kind of a huge source of growth. Whereas like Some of the fintechs in Europe or the Middle East or Asia might have a harder time penetrating the US because there's not there's like a barrier there, so to speak.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I mean, it's almost a derivative of US growth. And then also ex US growth. No, I mean, like South America, I never really bought into, but by the Americas, I really buy into. I think it's. So, like, if I'm doing, if I can't manufacture in the US, like LADM has so much, like, you have a cheaper cost of labor and it's not questionable labor. Like some places in Southeast Asia or China, like it's not repressed, right? It might just be like lower cost. But they have engineers, like they have universities, whatever. There's a well-educated base. So you can do manufacturing, you can do advanced manufacturing, whatever. Ultimately, like if you have some growth coming permeating from the US, like used to be capital flows going to like FDI going to other parts of the world, I think that'll be going to Latin, government or corporate or public-private. And then also, I think you have a funnel up. So like Neobanks and crypto used to be personas on grada for policymakers in DC, right? And now I think you have a huge flip, complete regime change where like Erabore, all these other side, I guess.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Know it's gonna, we're going back to like natural resources matter. It's like a tangible story, and ultimately, I think these are the countries that people are going to go through. So when EM is selling off broadly and like credit spreads are repricing, you want to find the regions and kind of countries that you actually like so that you can kind of pair those against the ones you don't like. And I'm a huge fan. Like I think there's going to be, I don't know who the next president is, but like I don't know if their name will fit with Dunro doctrine as well. But if it's a Republican, I think it'll be Donroe Doctrine for another four years. And like, it'll just keep running regardless.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Know you can actually not even just do the tradable sector stuff, but you can have actually consumption accelerate as well, and you can have not like a one kind of, I don't know, one node of growth. You can have two. So I think it's a huge, huge, huge, huge opportunity. Ultimately, I think they're one of the geographical winners of the Iran conflict. Middle East, Europe, Asia, all kind of hurt by this, like a lot more energy independency in Latin America. They're not exposed to any of these regimes. Me, it seems like a winner, and like, I really like looking at some of these countries, like Brazil is obvious, and people have been doing carry trades with the real for however long. But I mean, like Brazil, Colombia, Mexico, Argentina is its own thing. But Peru, Chile.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Just a great story. I think it's a great, like, it's the next probably place for growth. And I think FinTech there can probably help. There's a ton of like human development there, but like low incomes, right? And like maybe Mexico is in the middle income world. But like most of them are kind of like lower income relative to how quote unquote developed their country is and how many and the strength of their institutions. So if you can accelerate from like a low income to like a middle to upper middle income country because you have this huge fintech impulse and like you can skip traditional banking services and deepen credit there.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Educated populations generally. They're not dealing with mass immigration as an issue. I mean, they have some immigration to the U.S., but that's kind of Central America more than a lot of South American countries outside of Venezuela maybe. Power gen, power transmission all looks good. Ton of natural resources, a lot of them can generate current account surpluses on their own and build FX reserves.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Ultimately, if we go there and we have to run the country, or we're really responsible for its path from there, that's a huge political risk. For the next two, three years, are we going to be running as nearly failed state? I think it's going to be really, really difficult. So, you know, Iran, Venezuela, Cuba, like if you want to make it a China story, sure, it didn't hurt, but I don't think that was the core part of the calculus. The rest of Don Roe doctrine and like Lad Am, I think has legs. I think it'll be a story for the next few years and even past that. I think like the world is going into spheres, whether you like it or not. And frankly, like as an investor, LADM has so many advantages when geostrategic and geoeconomic Of things are at a crossroads. It's positioned in the Western Hemisphere. It's near abroad to the US.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“So ultimately, you have to go in and run the country. Like the vice president, you can't just be like Delce Rodriguez, please run this country and give us some of the oil. Like give us some of the cigars doesn't do a lot. So I think it's actually a huge, like I think Rubio has, in terms of public perception done pretty well the past year. Like I think people are really on board with him.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Ultimately, Iran has proven to be much more challenging, so to speak, than Venezuela for myriad reasons. But Cuba is going to also be present its own challenges. Not in terms of like, oh, they're going to have all these military and defense forces that we can't handle. That's not an issue. I think the issue with... But there's not really a huge like. Really have institutions, you know what I mean? Like, their public sector is pretty, it can do refreshion, it can't do a lot of other stuff. They have a ton of micro and small businesses that basically are the new source of growth for their economy, whatever growth that is. They run a huge deficit. They don't have a tradable sector. Their export is like. Cigars, sugar, tobacco. Like there's nothing there to build reserves.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“So, I don't think it's all about China, but I think it is an input, right? So I ran, I don't think had anything to do with China, but you might be expecting like, okay, this is 10 times worse for East Asia than it is for us. If anything, we might benefit on the margin. And it's to a lesser extent bad for Europe. Venezuela, also bad for China. I don't think that's the core impulse for going there. Know, like it doesn't like, is the provision of insurance to the straightforward moves and anti-China thing or a pro-China thing? Like that helps Chinese tankers, right? That helps them get energy. So I don't think that's part of the calculus. I don't think it's like the core thing. I mean, if they go to Q, I think Cuba.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“That's one of the key exporters to China of oil. And then now also Iran and the straight of form use. They're a huge exporter to China oil as well. It does feel like all these pieces move towards this focus on China. And I'm just wondering how much credence do you give to that framework?”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“That's great framing. Okay, I want to zoom out to how this conflict sits within the rest of the context of some of the geopolitical priorities of the Trump administration. So you mentioned earlier that, okay, look, there is this national strategic interest document strategy that they put out in the fall, and you're saying that people are probably over-indexing a little bit towards that a bit too much. But still, you have this pattern of, okay, what's going on here? We have the Venezuelan initiative. We have Iran now. We have talk about a Don Roe doctrine where they're trying to create this sphere of influence within the America landscape, which means potentially Cuba is going to be the next piece on the chessboard here. When you put those all together, people speculate that this is really quote unquote, all about China, which is that, okay, we need to get our sphere of spherification that you mentioned at the same time as, okay, if we go after Venezuela oil,”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Assets like moving globally, co moving together, you're going to see like U.S. assets move in one direction, European assets move in one direction, or be more tightly correlated, EM assets will be more tightly correlated. And then that's when you can kind of pick out the assets that you like. Yeah, I don't know. I think we're all trying to figure out what's going on. And ultimately, when that flips is when you can start pricing in the winners and losers on like a country by country basis or like region by region”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“When do we go from bonds globally selling off to bonds globally rallying? I think when you flip is you're probably, it's probably going to be more of an intangible shock. And so this is part of my framework. When it's more of like a infinite, non-physical, it's regulatory, it's like fiscal or monetary policy sanction, something that isn't kinetic action or like a physical climate event, something like that, or affects the labor market is when you're going to see that like country by country dispersion. And so instead of”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“This. And so I think there's no chance. I think if anything that cut, so I completely fade this. And you could like do this relative to sofa, I think, because it's much less likely that the US actually hikes. I doubt they would ever do that in this scenario. They just wouldn't need to. So you can do that relative to that. I think UK rates have repriced. Canadian rates have repriced. I don't really buy it. But ultimately, like who loses is European cyclicals. autos, industrials. They're going to get hit whether they hike, whether they don't hike. And this is like a growth shock. Like the euro is going to get hit. And like, could you imagine pricing in like two cuts or like one or two cuts? And then going to pricing in one or two hikes and your currency still falls. Like it's just not a good situation.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Have growth is pretty lackluster, sub one and a half percent in real terms in the EU. Unemployment's low but probably accelerating because wages have been falling. So like I think it probably just troughed and now is obviously going to be going higher. And then you're in a trade war with your biggest export market. So you're importing deflation from China more than you used to. You're in a trade war with the US because you felt emboldened by the Supreme Court ruling and because like you refused to do digital service taxes and get rid of those, which is, I don't know, not a huge like revenue raiser, but that's fine. What world does you hike and make this issue worse? And what, like, in what world do you make your tradable? Do you punish your”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Just boosts your real effective rate. So now their currency is even stronger in terms of trade. There are terms of trade are decreasing because on one hand you have higher import prices like the German manufacturing sector now has higher inputs. But then their export prices are going to be crimped, right? Because as oil rises, assuming there's not like a huge fiscal impulse, you can't spend as much on services. Like you're just your real purchasing power has decreased because the cost of essentials has gone up. So now you have a terms of trade negative hit.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I mean, I think it should be a negative growth impulse anyway. Like, I think that's the story. If your takeaway is that capacity, like because infrastructure is turning off. Being hit, and if your thing is that energy supply is now constrained for the intermediate term, you might think that like, okay, there's going to be higher prices for longer. And that's an inflationary impulse. Ultimately, I think, okay, let's say you're Christina Lagarde. I'm Christina Lagarde. I have a lot of scarves. The euro's real effective exchange rate is super high right now. If you have an inflationary impulse,”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“Would actually be a very negative growth impulse, therefore, it feels weird that we have hikes priced right now. So, yeah, I'm just curious, what's your specific framework for understanding that tension point about when it flips towards the negative growth impulse component?”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT
“I mean, I think that's what's so hard about something like an oil supply shock for how the market should digest that. Because you have the short-term impact, which is that, okay, energy prices are going to go way higher, prices at the pump are going to go way higher. That short-term, you have a short-term inflationary dynamic. But then on the other side of things is you have the negative growth impulse associated with that, where as that works its way through the economy, you then have the negative growth outlook associated with it. And that just feels like something really difficult for markets to try to digest. And you're right that right now, when you look at the short-term interest rate markets across the world and like you said, Europe, they're pricing in hikes, which is crazy when you consider the fact that, okay, if energy was really going to, really, really spike like it, like it could well in Europe.”
2026-03-11 · Forward Guidance · The Global Economy Is Splitting Into Spheres | Eric Wallerstein · IDENTIFIED FROM THE TRANSCRIPT