The B-School Lecture That Predicted "Fault Lines"

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The B-School Lecture That Predicted "Fault Lines"

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I recently came across this audio recording of a lecture I gave at UNC Wilmington on April 16, 2025. I recorded it on my iPhone, then forgot about it. Listening to it more than a year later felt a little surreal. ~MSWJust days after the Liberation Day tariff shock, I stood in front of a classroom at UNC Wilmington and tried to explain what I believed was happening.I was not there as a partisan or as an economist, but as someone who had spent decades inside markets; I’d been on trading desks during Black Monday, the Long Term Capital Management collapse, the dot-com implosion, and the Great Financial Crisis.So I’d seen a few things. And what struck me then was simple: this felt different. Not because markets were panicking. Markets panic more often than most people know. But this was one of the first moments in modern financial history where the panic was caused, not by some external shock, but by deliberate policy. At the time, I described it this way:“This is the first time that we’ve actually had the government be the cause of the crisis.”This wasn’t a polished thesis—it was an observation in real time. But in retrospect, I realize something: That lecture was essentially an early draft of what would later become Fault Lines.The Journeyman is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.The crack in the safe-haven mythosOne thing that stood out immediately after the tariff escalation was something that rarely happens. The stock market fell like a rock. And at the same time, U.S. Treasury bonds sold off. And the dollar was weakening.Normally, when panic hits, global money runs toward the U.S. It’s what we call the flight-to-safety reflex. But this time, just the opposite happened. I told the room full of business school students:“People generally consider the dollar and the U.S. Treasury market the safest place in the world… until now.”One year later, that observation matters more than it did then. That’s because what looked like a temporary stress event increasingly resembles something structural.This morning, the interest rate on the 30-year Treasury bond hit 5.18%, the highest since before the 2008 financial crisis. That is not just “bond market volatility.” It is a market pricing in a loss of confidence. The bond market isn’t waiting for the Fed. It’s tightening financial conditions on its own. But this story is about more than the machinations of the Federal Reserve. Mortgage rates, corporate borrowing, infrastructure financing, and federal interest costs all take their cue from the long end of the bond market. The 30-year Treasury bond reflects:* Inflation expectations* Percieved fiscal risk / Treasury supply* Term premium (the extra compensation for locking money up for 30 years)* Geopolitical risk (oil / Iran / supply shock)The stagflation warningDuring my talk at UNCW, I also warned that tariffs weren’t just a trade policy story. They were an inflation story. And a growth story. Which means they were potentially a stagflation story. Here’s what I said:“What we’re looking at right now is almost certainly going to cause prices to go up… You’re going to have prices going up and the economy falling into recession.”That wasn’t a certainty call. It was a systems call. If you impose a supply shock while simultaneously destabilizing confidence, it’s the kind of setup you create.China has always been the big storyEven then, the narrative around tariffs felt incomplete. Because while campaigning on bringing back manufacturing sounds compelling, systems don’t care about slogans. So I asked a simple question:Who exactly is supposed to do the work? We’ve spent decades offshoring production. We hollowed out industrial labor capacity. We built supply chains around lower-cost labor abroad. At the same time, political rhetoric targeted immigrant labor pools that historically support low-cost domestic work. The contradiction was visible immediately. At the time, I said:“China’s thinking 50, 100 years down the road, and we’re thinking about four years to the next election.”That line hits harder now. Because the tariff story was never just about tariffs. It was about leverage. Industrial leverage. Resource leverage. Supply chain leverage. And eventually, chokepoint leverage. Today, we’re talking openly about rare earth dependency, semiconductor competition, shipping vulnerability, and strategic economic coercion.But the asymmetry was already there. Before it was obviousI’m not reposting this because I think prediction is magic. Believe me, markets humble even the best traders. The value of independent analysis isn’t about being right about every detail. It’s about seeing structural stress before the consensus catches up.My lecture that April wasn’t a complete theory, but listening to it now, I hear the beginnings of Fault Lines. I’m asking the same questions, pointing ...

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