David Zervos

Zervos states that the "Economic Armageddon" predictions for both inflation and growth "have actually not played out," noting that CPI is back to 2.4% and GDP is "running at close to 3%." The bear case of stagflation or deep recession has been invalidated by the data. A backdrop of 3% growth combined with normalized inflation creates a "Goldilocks" environment that supports risk assets and broad equity valuations. LONG US Equities as the macro fundamentals remain resilient. Unexpected resurgence in inflation or a sudden deterioration in labor market data.

Oil prices have returned to pre-Iran conflict levels from early March, and momentum suggests they are headed lower soon.

David Zervos says current levels are good for long-term investors to get involved in the bond market. He argues the rise in yields is about rising real rates from a large capital call and expected future productivity growth, not inflation expectations, Fed credibility, dollar collapse, or chaos. He also says the long-run impacts of this investment are highly disinflationary, and rate-hike excitement is overblown, even if yields could break a little higher first.

Zervos argues the Treasury Department's debt buyback program is a tactical Operation Twist-style move that has been hugely successful when the Fed used it, and that the Treasury holds all the firepower. He expects the buybacks to cap the upper end of the two-year 10-year Treasury yield range near 4.81% and says traditional bond vigilantes will not win battles against the Treasury.

Zervos states that the "Economic Armageddon" predictions for both inflation and growth "have actually not played out," noting that CPI is back to 2.4% and GDP is "running at close to 3%." The bear case of stagflation or deep recession has been invalidated by the data. A backdrop of 3% growth combined with normalized inflation creates a "Goldilocks" environment that supports risk assets and broad equity valuations. LONG US Equities as the macro fundamentals remain resilient. Unexpected resurgence in inflation or a sudden deterioration in labor market data.

Zervos observes that "there is some reshoring. It's happening slowly" and that trade supply lines are moving. While not an overnight revolution, the structural shift toward reshoring supply chains provides a long-term tailwind for domestic industrial and manufacturing companies. LONG Industrials to capture the slow but steady value creation from supply chain localization. Higher labor costs in the US or aggressive tariff wars disrupting supply chains further.