#224 George Goncalves: The 2025 'Balancing Act' — Different Starting Points From Trump 1.0, Take Medicine Early or Keep Spending & What Could Break Markets
George Goncalves, head of U.S. macro strategy at MUFG, joins the Julia La Roche Show to discuss why 2025 will be a "balancing act" as markets transition from record highs to new economic realities. In this wide-ranging conversation, Goncalves explains why the Trump administration faces a critical choice between taking "short-term pain for long-term gain" early in the term or continuing fiscal largesse, analyzes why the 10-year yield breaking above 4.75% could trigger market turbulence, and breaks down why the Federal Reserve needs to keep cutting rates to avoid a recession in the second half of the year. Links: https://x.com/bondstrategist Timestamps: 00:00 Welcome to George Goncalves 01:17 Background and macro framework 03:15 2025 as a "balancing act" 05:35 Market complacency and valuations 07:19 Short-term pain for long-term gain 09:43 Business vs. government-led growth 11:01 Different starting points from Trump 1.0 13:38 Economy propped up by fiscal spending 16:21 Interest rates and fiscal policy 17:14 Bond market dynamics explanation 21:43 Credit market implications 23:26 Soft landing analysis 28:01 Market euphoria and transition risks 29:41 Deficit and debt analysis 33:05 Scott Bessent's 3-3-3 plan analysis 34:40 Fed policy outlook for 2025 39:15 Closing thoughts on dollar and oil