Stimmy Is Coming… But This Is Not 2020

Positioning for stimulus, debasement, and jurisdictional advantage in an era of fiscal dominance

Most governments around the world are staring down combinations of the same impossible math: aging demographics, unstable supply chains, populist pressure, geopolitical competition, and economies so financialized that austerity would implode asset prices and thereby the economy.

The result is predictable: they will spend aggressively because they have no alternative.

The question is not whether stimulus is coming, we already know this from existing proposals and announcements. It’s what form it takes, in what size, and where the money actually lands.

But this cycle is not 2020. There will be helicopter money, yes, but like the Covid era’s emergency healthcare spending there are new beneficiaries to consider for this round.

There are four primary subsets of stimulus ideas that I am focusing on and will dive into separately:

• U.S. Industrial & Critical Minerals

• U.S. Consumer Stimulus

• The Debasement Trade

• Insulated Economies

U.S. Consumer Stimulus

Covid-era stimulus materially changed the public’s expectations. Despite the stimulus checks we remember so well, corporations, asset owners, and PPP loan recipients captured the majority of the stimulus wealth transfer.

The next wave will look different. The U.S. consumer and political backdrop is far more fragile today:

• Inflation has outpaced wage growth for years

• Wealth inequality is at historic extremes

• Consumption is increasingly concentrated in upper-income households

• Lower- and middle-income households are strained

• Populist pressure is rising

Given deteriorating consumer strength and political pressure, future stimulus rounds will need to shift notably towards households that are actually struggling.

But timing matters. I expect checks will be delayed as long as possible to avoid pre-election inflation so long as the market can remain elevated, and so far public signaling suggests a mid-2026 window which aligns with this view.

For investors, this perspective shifts the winners to where the lower- and middle-income cohorts are likely to spend:

• Discount and working-class retailers and restaurants

• Value-focused grocers and staple producers

• Meat producers

• Energy, domestic travel

I conclude we are soon reaching an inflection point where we can no longer paper over our problems with rising asset prices and the wealth effect. The shift towards supporting a working class that is tired of fighting for table scraps will alter consumer spending patterns, and thereby investment opportunities.

U.S. Industrial & Critical Minerals

An obvious strategy to front-run fiscal stimulus is simple: listen to what the government says it will subsidize and assume they’ll overshoot.

The Trump administration has explicitly named critical minerals, domestic manufacturing reconstruction, and strategic investment as priorities, and they’ve already backed words with checks. A fresh $355m to expand domestic production of critical minerals was just announced yesterday. Deals with companies like MP Materials and Lithium Americas can include incentives like growth capital and price floors. Supply deals like US Antimony Corp’s are being announced.

This is not subtle.

Some analysts expect the government may eventually need to backstop parts of the AI infrastructure buildout – further expanding the scope of strategic industrial investment. I think this would be politically unpopular and do not expect this to happen, but it is very possible in a world where the government is taking equity stakes in companies like Intel.

Add in private AI datacenter buildout and expected foreign investment tied to trade deals – however overinflated they might be – and you have a real CAPEX and U.S. industrial base buildout tailwind.

The beneficiaries aren’t mysterious, but the scale and timing of these industrial buildouts are still uncertain. To account for this, I’ve split the opportunities into two categories based on structural inevitability and execution risk. Note that the listed beneficiaries consider all CAPEX buildout, both private and stimulus led, and will take time to show results.

Highest Conviction Beneficiaries:

• Critical minerals (front running announcements)

• Copper (now on critical mineral list; needed for reindustrialization, AI datacenter buildout, and grid infrastructure buildout including renewed renewable energy buildout in future administrations)

• Grid and transmission infrastructure

• Energy production, refining, and infrastructure

• Electrical equipment (transformers, switchgear, substations)

• Industrial gases

• Construction/EPC contractors

• Cement and aggregates

“Show Me” Beneficiaries:

• Machinery and heavy equipment

• Steel

• Aluminum

• Energy services and field operators

• Freight/logistics tied to domestic production (but currently very beaten down)

Some of these names are already priced richly and therefore are not attractively valued, while others are not as they reflect economic uncertainty and the prospect of recession, so these ideas deserve careful exploration and patience to find attractive entries with requisite risk/reward.

I’ll publish names I’m tracking or including in the Easter Egg Fund as they’re identified, but I will take my time with my fishing here, as I expect these trends to take time to materialize especially amidst economic concerns.

Debasement Trade

All roads lead here.

Sovereign debts will not be repaid in real terms anytime soon. The only politically viable path is currency debasement masked as “growth” or an “inflation surprise.” Governments will continue spending while suppressing rates through QE, yield-curve control, or whatever flavor of MMT they can get away with. Also known as fiscal dominance.

Debasement winners are the obvious ones:

• Precious metals, especially gold

• Bitcoin

• Commodity producers and refiners

• Real asset-heavy equities

• Select software providers

• Companies that hold durable inventory (when inflation is really taking hold)

And importantly:

Savers get punished. As we have already seen, bonds of any meaningful duration become a no-touch in an inflationary environment with suppressed yields. Knowing what not to hold matters as much as picking winners.

Insulated Economies

In a world where major economies are forced into aggressive fiscal expansion and currency debasement, where you invest matters as much as what you invest in. Especially when foreign exchange volatility is widely expected, owning assets denominated in the right currencies is crucial.

The question is: which countries have the demographics, natural resources, infrastructure, and political flexibility to avoid unproductive stimulus and outperform in an inflationary global regime?

Three stand out.

Brazil

My highest conviction foreign market.

• Commodity heavyweight with renewed relevance in a real asset world

• Strong demographics (large, young workforce)

• Well positioned to maintain strategic neutrality between the U.S. and China, benefiting from both trading partners in a multipolar world

• Consistent positive real rates and export demand support a stable currency

• Equity markets rich with dividend-heavy companies trading at attractive valuations

Brazil is positioned to benefit from a global inflationary environment supporting commodity prices, with a strong domestic backdrop to also grow the domestic economy. Investors are counting on a rightward shift in the upcoming elections – while I agree that this would be a positive result, I perhaps naively feel the country is well positioned regardless of election outcome given their positioning to play well in a multipolar world. Brazil does not need large stimulus to grow, and as growth materializes the country is poised for further stability.

India

India fits the framework almost perfectly:

• Elite demographics – the strongest of any major economy

• A rising middle class driving domestic consumption

• Limited fiscal dependence relative to peer countries

• Strategic importance in a multipolar world (supply chain diversification, growing consumer market)

• High real growth potential even in an inflationary global environment

• Access to cheap Russian energy

The only caveat is valuation: Indian equities are not the cheapest. But structurally, India is one of the few large economies set up to thrive through global reflation and currency volatility.

For macro positioning, it belongs on this list to watch closely and consider building a position, especially on weakness.

China (Proceeding with Caution)

China is facing severe demographic difficulties, but structurally it still carries very potent advantages:

• It already built domestic supply chains and technological advantage in critical minerals, solar, batteries, EVs, and nuclear

• It is pivoting toward boosting household consumption’s share of GDP

• It remains central to regional economic architecture

• It benefits from a large internal market and policy agility (China can push through painful reforms, such as deflating the real estate bubble, with far less political risk than Western governments), helping to avoid unproductive stimulus and currency debasement

• Access to cheap Russian energy

The risks here are twofold. For one, identifying investment opportunities can be tricky given the state-run company dynamics and ultra-competitive low-margin industries like EVs, but opportunities are promising in the right segments of the economy. But the biggest risk is not economic – it is geopolitical. U.S.-China relations could deteriorate to the point where foreign capital becomes trapped, much like with Russia in 2022. Because of these factors, exposure must be selective, ideally discounted, and sized carefully.

China fits the framework, but risk management matters more here.

Conclusions

Stimulus is coming – both to corporations and, increasingly with time, to consumers. But this time around, the distribution will be targeted, the political priorities are different, and the currency debasement endgame is beginning to rear its head.

The investment map begins to come into focus when you see stimulus, industrial policy, debasement, and jurisdiction as a single integrated system:

• Industrial policy → potential stimulus recipients and domestic picks & shovels

• Consumer support → value retailers and essentials

• Debasement → real assets and companies who thrive during inflation

• Jurisdiction → demographics, stability, and resource leverage

The era of fiscal dominance is here. The investors who understand these dynamics and position accordingly can avoid falling victim to debasement themselves.

More to come on specific names and portfolio construction.

Jeff

All content from Easter Egg Capital is for informational and entertainment purposes only and should not be considered financial, investment, or trading advice.