Lyn Alden: What Happens Once Tariffs Destroy Economy

Watch on YouTube ↗  |  February 13, 2025 at 20:18  |  49:34  |  The David Lin Report
Speakers
Lyn Alden — Founder, Lyn Alden Investment Strategy

Summary

Lyn Alden discusses the hotter January CPI print, arguing inflation remains sticky due to prior money printing and large fiscal deficits, with fiscal dominance and tariffs more important than small Fed rate moves. She reviews tariff risks, the proposed US sovereign wealth fund, liquidity conditions, and asset-class outlooks. She remains constructive on Bitcoin, gold, US banks, emerging markets, and cheap global equities, while warning on Costco's high multiple and preferring shorter-duration Treasuries/TIPS over the long end. She also assesses stablecoin/T-bill demand and the market implications of potential Russia-Ukraine de-escalation.

  • January CPI came in above expectations; Alden sees sticky inflation and expects it to remain above target in 2025.
  • She says fiscal deficits and tariffs matter more than modest Fed rate changes under fiscal dominance.
  • Tariff escalation is viewed as a potential global tax increase that could raise recession risk and make business planning harder.
  • Liquidity conditions look supportive overall, with global dollar M2 a preferred gauge and asset correlations higher post-COVID.
  • She is constructive on Bitcoin, gold, US banks, emerging markets, and cheap global equities.
  • She warns Costco trading around 60x earnings is unwise and prefers TIPS/short-duration Treasuries over long-end bonds.
  • Stablecoin growth could be a future tailwind for T-bill demand and dollar dominance, but scale is currently small.
  • Russia-Ukraine de-escalation would be positive for markets and reduce energy tail risks.
Ideas
Lyn Alden Founder, Lyn Alden Investment Strategy 21:30
Costco 60x earnings is unwise.
Costco trading around 60 times earnings despite historically high rates is unwise. High-valuation equities are at risk if rates stay higher for longer, even if the valuation does not have to correct within a year.
COST HIGH
Lyn Alden Founder, Lyn Alden Investment Strategy 22:58
Favorite 2025 asset; liquidity and regulation support.
Bitcoin is her favorite asset for 2025 on sheer return potential. She sees it supported by the post-COVID fiscal-dominance and liquidity regime, improving regulatory certainty after the spot ETF and Trump victory, reduced tail risks, potential purchases by the US, central banks, sovereign wealth funds and corporations, and on-chain valuation metrics that are only middling rather than flashing red, giving her confidence for the next 18 months.
BTC HIGH
Lyn Alden Founder, Lyn Alden Investment Strategy 23:04
Cheap global equities offer better than bonds.
There are still many cheap equities in the US and internationally. Expensive headline US market multiples like market-cap-to-GDP or CAPE cover thousands of stocks, while plenty of areas trade at normal valuations and offer better return potential than bonds.
VT MED
Lyn Alden Founder, Lyn Alden Investment Strategy 23:33
US banks outperform; unloved, fiscal, deregulation tailwinds.
US banks are likely to do better than expected because sticky high inflation, ongoing fiscal expansion, some deregulation, and Trump pressure for lower rates create a supportive backdrop; banks are not tightening lending standards sharply, and the sector is not a liked asset class.
KBE MED
Lyn Alden Founder, Lyn Alden Investment Strategy 23:42
EM underowned; some unaffected by trade war.
Emerging Markets are interesting because they are very underallocated and disliked, especially in a trade war environment, but some are not that affected by tariffs and offer attractive valuations.
EEM MED
Lyn Alden Founder, Lyn Alden Investment Strategy 36:35
Long gold; central banks, currency debasement support.
She is long gold. Gold has broken out of consolidation with buying broadening from foreign central banks and China to North American buyers. Central banks want non-seizable reserves, and many major currencies face structural problems, making gold attractive versus most currencies long term.
GLD HIGH
Lyn Alden Founder, Lyn Alden Investment Strategy 39:29
Stablecoin growth may boost T-bill demand.
Stablecoins are one of the remaining levers for US dollar dominance and could create trillions of dollars of Treasury demand if adoption grows 5-10x from the current roughly $200 billion market. Because stablecoins need short-duration collateral, that demand mostly benefits T-bills rather than long-end Treasuries, so it is a monitored tailwind for T-bills.
BIL MED
Lyn Alden Founder, Lyn Alden Investment Strategy 44:34
Avoid long bonds; prefer TIPS/short duration.
She is mixed on bonds and less structurally bearish than before, but she still sees less compelling reasons to own long-end Treasuries than gold, the middle or short end of the curve, or TIPS. Treasury issuance is heavy, foreign appetite is weak, and a terming-out of debt or energy shock could push 10-year yields toward 5% and cause market turbulence, so she prefers shorter duration and TIPS over the long end.
Long-end Treasuries MED
Lyn Alden Founder, Lyn Alden Investment Strategy 44:34
Avoid long bonds; prefer TIPS/short duration.
She is mixed on bonds and less structurally bearish than before, but she still sees less compelling reasons to own long-end Treasuries than gold, the middle or short end of the curve, or TIPS. Treasury issuance is heavy, foreign appetite is weak, and a terming-out of debt or energy shock could push 10-year yields toward 5% and cause market turbulence, so she prefers shorter duration and TIPS over the long end.
TIP SHY MED
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This The David Lin Report video, published February 13, 2025, features Lyn Alden discussing COST, BTC, VT, KBE, EEM, GLD, BIL, Long-end Treasuries, TIP, SHY. 9 trade ideas extracted by AI with direction and confidence scoring.

Speakers: Lyn Alden  · Tickers: COST, BTC, VT, KBE, EEM, GLD, BIL, Long-end Treasuries, TIP, SHY