MacroVoices #483 Vincent Deluard: MAGA vs. Corporate America

Episode Summary

Executive Summary: Macro Voices focused on the post-tariff rally, rising bond-yield risk, and Vincent Deluard’s view that Trump-era policy is shifting the tax burden from wages to corporate profits while discouraging foreign capital. Deluard argued recessions are being suppressed by fiscal/monetary stimulus, Europe is relatively improving, China/U.S. decoupling is hard, and investors should hedge summer volatility despite the market’s resilience.

Main Topics: Market outlook: rally, correction risk, and summer seasonality (Priority: 5/5): Deluard said the market has already rebounded more than expected after a March tariff-driven correction, but sees rising bond yields, tariff deadlines, Fed policy risk, earnings season, and weaker liquidity as catalysts for a potential summer pullback. Trump/MAGA policy as a transfer from corporate profits to wages (Priority: 5/5): Deluard argued the 'Big Beautiful Bill' protects wages and personal income while leaving corporate income taxes and tariff costs to corporations, effectively turning tariffs into a corporate tax and squeezing margins. Foreign capital risk and the end of unquestioned U.S. market exceptionalism (Priority: 5/5): He warned that proposed withholding taxes on dividends/interest and remittance taxes could reduce foreign appetite for U.S. assets, triggering a broader reallocation of global savings back home and strengthening international markets relative to the U.S. Recession cancellation through structural stimulus (Priority: 4/5): Deluard claimed recessions have become far scarcer because of monetary/fiscal activism, aging demographics, healthcare inflation, and a digital/service-heavy economy, creating a baseline of structural stimulus that offsets cyclical weakness. Europe’s relative improvement and a secular shift in transatlantic alignment (Priority: 4/5): He said Europe may benefit from tariffs, a weaker dollar, more trade deals, public investment, and easing inflation, implying longer-term relative outperformance versus the U.S. and a looser U.S.-Europe alignment. China, Taiwan, and the limits of decoupling (Priority: 4/5): Deluard argued the U.S. is more dependent on China than many realize because of supply-chain concentration, making decoupling difficult and raising the odds that China retains leverage in trade disputes. Chart-based post-game: bonds, precious metals, uranium, and yield curve (Priority: 4/5): Hosts reviewed technical setups suggesting continued dollar weakness, a potentially volatile crude oil basing pattern, constructive gold/silver/platinum breakouts, a lagging but promising uranium trade, and the possibility of a further yield-curve steepening.

Key Arguments: The spring rally exceeded expectations, but July is a plausible correction window because tariff pauses expire, Fed guidance may disappoint, and tariff impacts will start showing in guidance and earnings. Tariffs function as a tax on corporations, not just a trade tool; the practical burden falls on corporate profits and margins rather than on workers’ income. The bill’s tax relief is concentrated on wages/personal income items, while corporate taxes are not meaningfully reduced, implying a redistribution from profits to labor. Withholding taxes on dividends/interest paid to foreigners and taxes on remittances represent an opening move toward capital controls and discretionary treatment of foreign capital. U.S. equity outperformance may weaken as foreign investors and pension funds rebalance away from extreme U.S. allocations and repatriate capital. Recessions have been 'canceled' by persistent fiscal deficits, healthcare spending growth, and policy support that keep nominal growth from falling into contraction. Europe could enjoy a relative macro tailwind from disinflation, public spending, and redirected trade flows, even if its long-term growth remains modest. Decoupling from China is difficult because China supplies too many critical products; embargoes can become self-embargoes. The geopolitical and economic environment may still favor peace, but both U.S.-China and U.S.-Europe relationships are becoming less stable and less symmetric. Technical markets suggest broad participation in precious metals and a setup in uranium that could offer upside if consolidation occurs first.

Data Points: SP 500: 5970 - Week-over-week close on Wednesday, June 4, 2025; up 139 basis points. U.S. Dollar Index: 98.81 - Down 107 basis points, back to April lows. July WTI crude oil: 62.85 - Up 163 basis points; still range-bound but attempting breakout. July RBOB gasoline: 203 - Down 146 basis points. August gold: $33.99 - Up 232 basis points; near all-time highs in the transcript’s quoted scale. July copper: 488 - Up 450 basis points. Uranium: 71 - Down 98 basis points. U.S. 10-year Treasury yield: 4.35% - Down 13 basis points. Market back near highs: ~15 straight up days after tariff pause - Deluard cited a strong rebound following the tariff pause. Tariff pause: 90 days - Deluard noted the pause ends in July, a key policy-risk date. Target-date fund exposure: Stocks have outperformed bonds by 20%+ this quarter - Used to argue retirement accounts may rebalance out of equities. Average European pension fund U.S. equity allocation: 52% - Deluard said foreign portfolios are heavily overweight U.S. stocks. Norwegian Pension Fund MAG 7 holdings: 100% of Norway’s GDP - Illustrative example of extreme concentration in U.S. mega-cap tech. Corporate profits as share of GDP: All-time high - Deluard cited the profit share as evidence of unusually elevated margins. U.S. healthcare spending growth: 10% per year since 2022 - Used to support the case for structural stimulus and recession suppression. Nominal GDP growth: ~6% per year at best - Deluard contrasted this with healthcare growth to argue for a growth floor. Healthcare share of GDP: ~20% - A key sector supporting the baseline growth argument. Federal deficit: 7%-8% of GDP - Deluard argued fiscal policy remains highly expansionary. Recession frequency in the 19th century: ~40% of the time - Historical framing for how recessions have become less common over time. Time since last true recession: 16-17 years - Deluard excluded COVID as a real recession because it was self-inflicted and brief. ECB meeting stance: 100% certainty of a cut - Deluard expected easing in Europe versus Fed caution in the U.S.

Pivotal Quotes: "the MAGA movement has declared war on corporate America" — Vincent Deluard: His framing of Trump-era policy as a shift from populist rhetoric to corporate burden-sharing. "recessions have been canceled by monetary policy" — Vincent Deluard: His core thesis on why modern policy and demographics have muted the business cycle. "The U.S. has been a giant whirlpool that sucked in global capital for really 30 years" — Vincent Deluard: His description of why foreign capital has flowed so heavily into U.S. markets and why that may reverse.

Implications: Investors should expect more policy-driven volatility, possible margin pressure for U.S. corporates, and a bigger need for hedges. Relative winners may include international equities, select European markets, precious metals, and possibly uranium if the consolidation resolves higher.