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EndGame Macro
Why the Inflation Story May End in Deflation
The Harvard Pricing Lab chart is pretty straightforward. Goods prices were drifting lower, then the trade war started and the trend flipped. Imported goods jump the most, but what really matters is that domestic goods rise too. That’s the tell. Tariffs don’t stay neatly contained at the border because they leak into costs, supply chains, and pricing behavior across the whole economy.
Why the inflation story doesn’t end there
The first effect is obvious where prices go up. That’s the part everyone talks about. The next effect is quieter and more dangerous. A lot of these goods are price sensitive. People delay purchases, trade down, or walk away. Companies are stuck choosing between passing on costs and losing volume, or eating costs and losing margins. Either way, cash flow tightens. That’s not an inflation spiral, it’s a slow squeeze on liquidity.
Once margins get hit, behavior changes. Hiring slows. Investment gets pulled back. Inventories shrink. Retaliation from trading partners adds another layer of demand loss. What started as an inflationary shock begins to work in reverse, pulling demand and prices lower over time.
What comes next
There’s one more channel people tend to miss. If tariffs actually shrink trade imbalances, they also shrink the foreign dollars that usually get recycled back into U.S. stocks, bonds, and Treasuries. Less recycling means less marginal support for asset prices and funding markets. That’s another tightening force that doesn’t show up in CPI, but absolutely shows up in liquidity.
My View
This doesn’t end with runaway inflation. It ends with growth and liquidity doing the disinflation for you. The risk isn’t prices reaccelerating, it’s the system tightening until demand cracks. Watch margins, layoffs, credit spreads, and funding conditions.
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Why the Inflation Story May End in Deflation
The Harvard Pricing Lab chart is pretty straightforward. Goods prices were drifting lower, then the trade war started and the trend flipped. Imported goods jump the most, but what really matters is that domestic goods rise too. That’s the tell. Tariffs don’t stay neatly contained at the border because they leak into costs, supply chains, and pricing behavior across the whole economy.
Why the inflation story doesn’t end there
The first effect is obvious where prices go up. That’s the part everyone talks about. The next effect is quieter and more dangerous. A lot of these goods are price sensitive. People delay purchases, trade down, or walk away. Companies are stuck choosing between passing on costs and losing volume, or eating costs and losing margins. Either way, cash flow tightens. That’s not an inflation spiral, it’s a slow squeeze on liquidity.
Once margins get hit, behavior changes. Hiring slows. Investment gets pulled back. Inventories shrink. Retaliation from trading partners adds another layer of demand loss. What started as an inflationary shock begins to work in reverse, pulling demand and prices lower over time.
What comes next
There’s one more channel people tend to miss. If tariffs actually shrink trade imbalances, they also shrink the foreign dollars that usually get recycled back into U.S. stocks, bonds, and Treasuries. Less recycling means less marginal support for asset prices and funding markets. That’s another tightening force that doesn’t show up in CPI, but absolutely shows up in liquidity.
My View
This doesn’t end with runaway inflation. It ends with growth and liquidity doing the disinflation for you. The risk isn’t prices reaccelerating, it’s the system tightening until demand cracks. Watch margins, layoffs, credit spreads, and funding conditions.
Harvard’s Pricing Lab data shows that goods prices – which were previously declining – have been on the rise since Trump started his trade war. Even domestic goods prices rose, though by a smaller amount. https://t.co/A2PoivRJcK tweet
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Wasteland Capital
Mag 7 YTD. $GOOG still the reigning wealth creation champion.
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Mag 7 YTD. $GOOG still the reigning wealth creation champion.
$TSLA doing a late-year runner, now back at all time high.
And then there’s $AMZN... 🥴 https://t.co/jHUmv3tVV2
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The Few Bets That Matter
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Resolving pain points is one of the most lucrative business.
$PLTR did it. $UBER did it. $SHOP did it. $AMZN did it
Billions were created by focusing on a single pain point & solving it, for enterprises & consumers.
$PATH is on its way to do the same.
https://t.co/dWiVxVZ3Th
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