The Great Unraveling
The global economy is shifting—tariffs are back, the carry trade is crumbling, and commodities are waking up. Winners and losers are emerging. Where do you stand?
At some point, people stop asking whether something is broken and start figuring out how to live with it. The global economy is in one of those moments.
We sit at the intersection of shifting economic tides, decades-long financial strategies unwinding, and old-world alliances fracturing in dramatic, headline-grabbing fashion.
The stakes are high.
If we’ve learned anything from history, it’s that transitions are painful, inflation is stubborn, and every economic cycle creates new winners and losers.
Today, a grand restructuring is underway. Tariffs are back in style. The carry trade is on its last legs.
Stagflation looms, and commodities—long dismissed as relics of a bygone era—are waking from their slumber.
Investors who recognize the patterns and position accordingly could find themselves on the right side of history. The rest?
They’ll be left scrambling, wondering what happened to the world they thought they understood.
Let’s explore.
Tariffs and the Fourth Turning
For the last few decades, free trade was gospel. Tariffs?
Those were the playthings of protectionists, of governments trying (and failing) to shield their industries from the unstoppable force of globalization. But history has a way of swinging the pendulum back.
Chris MacIntosh, a seasoned macro investor, frames the current trade war within the context of The Fourth Turning, the generational theory proposed by William Strauss and Neil Howe.
In their framework, history moves in cycles, roughly 80-100 years in length, marked by repeating stages: growth, unraveling, crisis, and rebirth.
Today, we are squarely in the “crisis” phase.
Old alliances? Crumbling. Globalization? Splintering. Tariffs? Now a preferred weapon of economic warfare.
Donald Trump reintroduced tariffs to the world stage in his first term, shaking up the economic orthodoxy.
Now, tariffs are being ramped up again.
Governments that once swore by free trade are dusting off their protectionist playbooks, hoping to shield domestic industries from foreign shocks.
MacIntosh calls this what it is: a seismic shift.
“In this Fourth Turning, you have old alliances break down and new alliances form,” he explains. “That is part of this bifurcation.”
The result? Supply chains are no longer reliable. Prices rise. The cost of doing business goes up. Stagflation—the ugly mix of inflation and slow growth—creeps in.
The Carry Trade: A House of Cards
For decades, financial wizards profited handsomely from the carry trade—borrowing cheap in low-interest-rate currencies (like the Japanese yen) and investing in higher-yielding assets (like Australian bonds or U.S. equities).
It was a brilliant strategy.
As long as rates stayed low, it worked like a charm.
But nothing lasts forever.
The Bank of Japan’s decision to raise rates from -0.1% to 0.25% in 2023 sent shockwaves through global markets.
Suddenly, the cost of borrowing in yen wasn’t negligible.
The entire premise of the carry trade—the idea that low rates were a permanent feature of the landscape—was shattered.
As MacIntosh explains, “The dampening of volatility brings more participants because it’s deemed now to be less risky, when, in actual fact, it is becoming more risky.”
And so, the dominoes fall.
The yen appreciated 8% against the Australian dollar in 2024, gutting carry-trade profits.
Meanwhile, the bond market—a safe haven for decades—is hemorrhaging capital.
MacIntosh notes that from 2020 to late 2024, investors in bonds saw nearly half their capital wiped out in real terms.
The bottom line? The easy money era is over. Risk-free arbitrage is gone. Investors who built their fortunes on low rates and cheap debt are facing a reckoning.
Investors who recognize the patterns and position accordingly could find themselves on the right side of history. The rest?
They’ll be left scrambling, wondering what happened to the world they thought they understood.
Let’s dive in.
Commodities: The Sleeping Giant Awakens
With financial strategies unwinding and inflation proving stickier than a congressional spending bill, one asset class stands poised to benefit: commodities.
MacIntosh traces this pattern throughout history.
“Going into them has been a situation of commodity undervaluation, and then coming out of them has been a relative repricing of those asset classes,” he explains.
We’ve seen it before:
In the 1920s, commodities crashed—only to surge during the Great Depression.
In the 1960s, oil was cheap—until the 1970s energy crisis sent prices sky-high.
In the 1990s, commodity markets were overlooked—until the early 2000s when China’s insatiable demand triggered a decade-long supercycle.
Today, we’re in a familiar spot.
Energy stocks represent just 3.6% of the S&P 500 index—near historic lows. In a world that still runs on oil, natural gas, and coal, that’s a glaring mispricing.
Meanwhile, geopolitical tensions (Russia-Ukraine, Middle East instability) and misguided green energy policies are tightening supply.
Goldman Sachs projects a 15% rise in the Bloomberg Commodity Index by the end of 2025. MacIntosh sees an even bigger upside.
The smart money is moving into energy, mining, and gold.
Investors still clinging to the tech-heavy, low-interest-rate darlings of the past decade? They’re in for a rude awakening.
Winners and Losers
Every economic shift creates winners and losers. Here’s how the chips are likely to fall:
Winners:
Energy (oil, gas, coal, uranium)
Mining (copper, gold, rare earths)
Agriculture (fertilizer, grain)
Domestic manufacturing (protected by tariffs)
Losers:
Tech stocks (overvalued, reliant on cheap capital)
Consumer discretionary (inflation squeezes spending)
Bonds (a losing trade in an inflationary world)
Carry traders (RIP easy money)
MacIntosh puts it bluntly: “Many of the sectors that we are invested in over time tend to outperform.”
Translation? The game has changed. Investors who recognize it will thrive. Those who don’t will suffer.
The Takeaway
History doesn’t repeat, but it rhymes.
The carry trade is unraveling. Tariffs are back. Inflation is sticking around, and stagflation is knocking at the door.
Meanwhile, commodities—left for dead over the past decade—are gearing up for a historic comeback.
MacIntosh leaves us with a final thought: “These events are not actually unusual. They are to be expected.”
Indeed, they are.
For those paying attention, this isn’t a crisis. It’s an opportunity.
The question is: will you seize it?
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