Notes: Digesting the Uncertain Macro
Summary
Trump’s policy mix is triggering near-term macro volatility but may ultimately lay the groundwork for a pro-growth, tech-friendly regime.
Reshoring, deregulation, and fiscal tightening are redistributing value across the tech stack, favoring leaner, innovation-driven players.
A more permissive FTC stance could reignite tech M&A, unlocking value in undervalued SaaS and infrastructure assets.
Digesting the Uncertain Macro: What It Means for Tech
The current volatility across markets is not just noise — it reflects a deep recalibration as investors try to interpret the long-term implications of President Trump’s second-term policies. With aggressive moves on tariffs, sweeping federal spending cuts via DOGE, and speculative tax reforms on the table, the bond market is struggling to determine whether the U.S. is headed for structural improvement or disorder. For tech investors, the stakes are high: this uncertainty directly impacts long-duration asset valuations, capex cycles, and global supply chains.
Bond Markets and Tech Valuations: Reading the Treasury Curve
At the heart of the volatility is a tug-of-war between fiscal tightening and inflation uncertainty. If bond investors come to believe that Trump’s deficit-reduction campaign — anchored by DOGE spending cuts — will meaningfully improve the long-term U.S. debt trajectory, then Treasury yields should decline across the curve. That would be profoundly bullish for high-growth tech stocks, particularly those unprofitable today (on an earnings or cash flow basis), but with cash flows expected far into the future.
However, this yield compression may be a first-order effect. If the private sector steps into the space vacated by government retrenchment — spurred by deregulation, tax incentives, and investment tailwinds — real GDP could reaccelerate later this year or into 2026. In that scenario, yields may rise again toward a new equilibrium (e.g., 4–5%), but this would be under a more favorable regime: one where growth is sustainably higher and the fiscal burden lighter, improving debt sustainability and supporting risk assets, including tech.
Some outlier views also consider a “best-case” macro outcome: high growth with disinflation due to productivity gains. While not consensus, it’s a plausible long tail scenario under Trump 2.0, particularly if productivity-enhancing reforms take hold, and would be a bullish tech environment, indeed.
