BNP's Mutkin Ponders a Risk Off Bond Market Trade

The transcript discusses the potential impact of trade policies, such as tariffs and trade wars, on earnings and supply chains, particularly focusing on emerging markets like Mexico and China. It highlights the value of domestic-facing stocks over export manufacturers in these regions. The conversation also explores how bond markets might react to risk-off scenarios, considering the Federal Reserve's slow policy movements and the implications for term premiums and yield curves.

What is the main concern for earnings forecasters regarding the Trump administration's policies?

• Increased domestic investment

• Higher interest rates

• Decreased consumer spending

• Potential tariffs or trade wars

Why are domestic emerging market stocks considered a better value?

• They are supported by government subsidies

• They are less affected by protectionist policies

• They have lower production costs

• They have higher export potential

Why is a trade war with China considered unlikely?

• China's economy is too small

• It would be a lose-lose situation for the US

• The US has no interest in Chinese markets

• China has no trade relations with the US

What is the traditional response of bond markets to uncertainty?

• Invest in high-risk stocks

• Sell off assets

• Buy Treasurys

• Increase interest rates

What might happen to the yield curve in response to current economic policies?

• It will remain unchanged

• It will steepen

• It will flatten

• It will invert