361Firm Briefing 253 "Two Sides of Inflation" (Feb. 11, 2025)

Stephen Burke discussed the shifting inflation risks, noting a decline from 9% to 3% but rising concerns. He highlighted the impact of high public debt, sluggish productivity, and global economic uncertainties on policy makers. The global inflation rate spiked in 2023 and remains above the 2% target, complicating Fed decisions. Chair Powell's testimony indicated a tight labor market and stubborn mortgage rates. Tariffs aim to support domestic manufacturing, raise revenues, and wield diplomatic power, but their effectiveness is debated. The discussion also covered the impact of tariffs on consumer prices, the role of tech companies in productivity improvements, and the challenges posed by China's resource control. Issues & Risks -Inflation risks have become more two-sided, with concerns about rising inflationary pressures. -High public debt, growing economic divergences, and sluggish productivity growth are limiting policymakers' choices. -Global inflation rates have spiked up and remain above the 2% target. -There are concerns about the impact of tariffs on inflation and economic growth. -Questions about whether the massive spending by tech companies will lead to expected productivity improvements. -Concerns about debt and deficits complicating policy decisions. Questions discussed -Who pays for the tariffs imposed by the government? -Is there an argument that real rates have seen their upside for now and aren't likely to rise much from here? -What is the impact of the return on cash to earnings for companies holding large amounts of cash? -What forms of retaliation are meaningful as a negotiating tool from Asia, Europe, UK, etc., particularly as it relates to tech companies? -Why doesn't the United States Trade Representative use the WTO framework to address trade issues with China? -What exactly is Trump trying to achieve with the sanctions outside of bringing manufacturing into the country? 360 One Firm (361Firm) is an independent global platform to collaborate on investments & philanthropies by/for family offices, institutional investors, and thought leaders. We collaborate across asset classes, industries and borders, in funds and direct (co-)investments as well as in both impact and charitable organizations and causes. Co-founded by ex-Andersen partners, we have a collaborative "one firm"​ culture, tailored to family offices who can add extraordinary value from industry experience and relationships. We believe in active engagement, facilitated by Weekly Briefing Roundtables, "Deep Dive" (web) conferences, and monthly Global Conferences (www.361firm.com/subs). Website: http://www.361firm.com/home LinkedIn: https://www.linkedin.com/company/360onefirm/ Important Notice for 361Firm Events: Rule #1: Teach. No Pitching or Politics. Our 361 forums are designed to facilitate connecting and open, respectful discussions and sharing of data, macro-level ideas, strategies, and insights across industries, asset classes, regions, philanthropies, or other topics. It is prohibited to discuss specific investment offerings or products in these events or our App, but of course you build relationships that can organically lead to offline discussions. Rule #2 - be sure to register. Qualified Purchasers (QPs) can join certain invite-only sessions. Sessions May Be Recorded. By participating in person or virtually, you agree to our sharing recordings, e.g. 361firm.com/synopses. 360 One Firm Capital LLC (361Firm) may include in these materials or events companies (1) in which 361Firm may have invested in or alongside and/or (2) which are clients for which 361Firm could earn a fee from raising capital or connecting to talent or strategic partners. www.youtube.com/361firm (the “361Firm YouTube Channel") is operated by 361Firm, a privately held limited liability company registered in the State of Delaware. 361Firm provides strategic and financial services. 361Firm offers Securities through Finalis Securities LLC Member FINRA (https://www.finra.org/) / SIPC (https://www.sipc.org/). 361Firm and Finalis Securities LLC are separate, unaffiliated entities. You can subscribe to various 361 events and content at https://361firm.com/subs. For reference: Web: www.361firm.com/homeOnboard as Investor: https://361.pub/shortdiagOnboard Deals 361: www.361firm.com/onbOnboard as Banker: www.361firm.com/bankersEvents: www.361firm.com/eventsContent: www.youtube.com/361firmWeekly Digests: www.361firm.com/digest