Barry Knapp

"Policy is... at least 50 basis points too tight for small banks... You need to steepen the yield curve... implement Bowman's bank deregulatory plan... I do expect it." Knapp believes the "Warsh/Bessant" plan will be implemented: Fed cuts rates to steepen the curve + deregulation. Regional Banks (KRE) are currently stifled by an inverted curve and regulation; this specific policy mix is the "unlock" for their profitability and lending ability. Long Regional Banks as a play on the "Warsh/Bessant" policy pivot. If the Fed remains hawkish due to headline inflation (ignoring the supply shock argument), small banks remain squeezed.

"We're actually the biggest exporter of oil in the world... Dollar goes up and oil prices go up." The US is uniquely positioned as a beneficiary of energy spikes relative to the rest of the world. While consumers hurt, US Energy producers (XLE) and the commodity itself (USO) capture the upside of the geopolitical risk premium without the currency drag facing foreign producers. Long US Energy. Demand destruction (recession) eventually causing oil prices to collapse.

Believes a manufacturing renaissance and broad capital investment cycle beyond AI is coming, leading him to overweight industrials, energy, and materials.

Kevin Warsh's likely Fed plan to cut the policy rate, unwind long-term securities holdings, and deregulate banks will steepen the yield curve and create a good environment for the banking sector, so he is overweight financials.

Believes a manufacturing renaissance and broad capital investment cycle beyond AI is coming, leading him to overweight industrials, energy, and materials.

"Europe and Asia have a much bigger problem with energy than we do... Korean equities, Japanese equities got absolutely hammered... Japanese autos in particular led the weakness... they're all short energy." Japan and Korea are net energy importers. When Oil rises *and* the Dollar rises (the currency oil is priced in), their costs explode while their currencies devalue. This crushes margins for heavy manufacturers like Toyota (TM) and Honda (HMC) and hurts the broader indices (EWJ/EWY). Short exposure to Asian energy importers. A sudden drop in the US Dollar or a ceasefire reducing oil prices would reverse this pressure.

"Europe and Asia have a much bigger problem with energy than we do... Korean equities, Japanese equities got absolutely hammered... Japanese autos in particular led the weakness... they're all short energy." Japan and Korea are net energy importers. When Oil rises *and* the Dollar rises (the currency oil is priced in), their costs explode while their currencies devalue. This crushes margins for heavy manufacturers like Toyota (TM) and Honda (HMC) and hurts the broader indices (EWJ/EWY). Short exposure to Asian energy importers. A sudden drop in the US Dollar or a ceasefire reducing oil prices would reverse this pressure.

"Europe and Asia have a much bigger problem with energy than we do... Korean equities, Japanese equities got absolutely hammered... Japanese autos in particular led the weakness... they're all short energy." Japan and Korea are net energy importers. When Oil rises *and* the Dollar rises (the currency oil is priced in), their costs explode while their currencies devalue. This crushes margins for heavy manufacturers like Toyota (TM) and Honda (HMC) and hurts the broader indices (EWJ/EWY). Short exposure to Asian energy importers. A sudden drop in the US Dollar or a ceasefire reducing oil prices would reverse this pressure.

"I doubt very much if tens [10-year yields] will keep going up because this is a hit to growth... This is far more of a disinflationary shock than it is an inflation cause." The market is selling bonds (yields up) fearing inflation. Knapp argues the opposite: high energy prices act as a tax, killing consumer demand (which is already slowing). Lower growth leads to lower yields. Therefore, the sell-off in bonds is an opportunity to buy. Long Long-Duration Treasuries (betting on yields falling/stabilizing). If the market treats the energy spike as "sticky inflation" rather than a "growth tax," yields could push higher to 4.5%+.

"Europe and Asia have a much bigger problem with energy than we do... Korean equities, Japanese equities got absolutely hammered... Japanese autos in particular led the weakness... they're all short energy." Japan and Korea are net energy importers. When Oil rises *and* the Dollar rises (the currency oil is priced in), their costs explode while their currencies devalue. This crushes margins for heavy manufacturers like Toyota (TM) and Honda (HMC) and hurts the broader indices (EWJ/EWY). Short exposure to Asian energy importers. A sudden drop in the US Dollar or a ceasefire reducing oil prices would reverse this pressure.

"We're actually the biggest exporter of oil in the world... Dollar goes up and oil prices go up." The US is uniquely positioned as a beneficiary of energy spikes relative to the rest of the world. While consumers hurt, US Energy producers (XLE) and the commodity itself (USO) capture the upside of the geopolitical risk premium without the currency drag facing foreign producers. Long US Energy. Demand destruction (recession) eventually causing oil prices to collapse.