The Rose Garden Massacre

A Supercyle is Upon Us

At Berkshire Hathaway’s 2024 AGM, Warren Buffett was asked about his enormous Apple Inc. sales.

Buffett replied, “I think you’ll be happy we sold what we did at a 21% tax rate. Well, uh, there are a few other things that might happen that could make you happy we sold as well.”

Knowing Buffett’s history, if Apple were undervalued, he wouldn’t have sold. His concern clearly wasn’t Apple—it was the macro picture. Specifically, what might bring down lofty asset valuations. Higher tax rates were clearly one of those concerns.

Buffett—and any clear-eyed analyst—has long been worried about the twin deficits: the unhinged U.S. fiscal and trade gaps, which have exploded since 2008, growing from $8 trillion to over $36.5 trillion. Tax hikes to offset this runaway debt were always a matter of when, not if—whether via payroll taxes, consumption taxes, capital gains, higher inflation, or some cocktail of them all.

Our national deficits are invisible taxes on future production and consumption. They’re a drag on real (not nominal) growth and a burden to the productive class. There are no easy fixes here.

Buffett’s tax concerns came before the 2024 presidential election. Since then, more than “a few other things” have happened.

Fast forward to today: Donald J. Trump is president once again.

Trump’s plan to rein in deficits and stave off a debt crisis is a two-pronged strategy:

1. Tax imported goods via tariffs to generate direct U.S. Treasury revenue.
2. Re-industrialize America to shrink the trade deficit by boosting exports.

On paper, it sounds solid—especially if implemented gradually.

The Trump administration projects tariffs could raise $6–7 trillion in revenue over the next eight years. But the Tax Foundation pegs the number closer to $2 trillion, accounting for reduced demand on costlier imported goods. (For context, the U.S. is expected to run a $2+ trillion deficit this fiscal year alone.)

But Trump didn’t just announce the leaked 10% reciprocal tariffs. Instead, he unveiled dramatically higher, unilateral tariffs—far more disruptive than markets or business leaders were expecting.

The tariff announcement event was held in the White House Rose Garden, and—ironically—dubbed “Liberation Day.” It quickly became a meme. “Liberated from all the winning,” some quipped. FMT has since called it what it truly was: The Rose Garden Massacre.

Markets responded violently: the major indices began dropping 5% per day. Foreign nations started selling U.S. Treasuries and repatriating capital. Yields rose. Interest expenses on our ballooning debt (already north of $1 trillion/year) surged. So did borrowing costs across the economy—from mortgages to corporate debt.

But this was more than a market reaction. It marked a seismic shift in global capital flows—the unraveling of the multi-decade “Wealth Effect” model, long propped up by the carry trade.

Indices didn’t care at all that the “wealth effect” was unsustainable. They kept bidding up the most overvalued corners of the market anyway. Financial planners looked the other way.

Falling asset prices now mean lower tax revenues—personal and corporate—and deficits as a % of GDP always rise in response. We’re watching it happen in real time.

This isn’t a judgment on Trump’s tariffs or broader strategy. It’s a commentary on the second-order effects—unintended and unpredictable—that shape economies and markets.

Transforming the global order overnight has massive ripple effects, especially when it unravels unsustainable monetary and trade flows that have persisted for decades. Some are now calling this rupture the “Mar-a-Lago Accord.”

Any entrepreneur knows how difficult it is to plan amid uncertainty. It becomes near-impossible when tens of thousands of business plans are thrown into disarray overnight by a single stroke of a pen. That’s exactly what happened on Liberation Day.

Our supply chains are intricate and fragile. Can’t source a single part? Your production line halts. Consumers suffer. Anyone remember the empty car lots during COVID and the spike in used car prices? This is déjà vu.

Thankfully, we were conservatively positioned before the Rose Garden Massacre due to valuations and fundamental concerns. We expect to benefit greatly from the fallout (more on that soon). Trade deals with countries like Japan and India—both highly dependent on energy imports—are already reportedly close. That’s no surprise.

But my big concern from day one has been China.

FMT knows China. When U.S. Treasury Secretary Scott Bessent claimed, “They’re holding a pair of twos,” we immediately disagreed. FMT said then—and still believes—“The Trump-Xi standoff will be one for the ages.”

Whether we’re right about how it ends doesn’t matter. What matters is that it has already begun. And capital flows are already shifting.

The bloated U.S. stock market was merely waiting for a pin. It appears to have found one.

Enter the Supercycle

We’ve anticipated a commodity supercycle, more on this in a minute. (And yes, we’ve been loving Bitcoin during the transition.)

Back to the showdown: Trump keeps escalating tariffs on China. China isn’t blinking. In fact, it’s raising in kind—restricting rare earth mineral exports vital to U.S. tech and autos, and banning major U.S. tech platforms. Meanwhile, the U.S. is scrambling to lock down alternative sources—like materials from Ukraine.

Again: it’s not about who wins. It’s that the conflict is already here.

Trump wants re-industrialization, export growth, and new tax revenues. China wants to further decouple from the U.S.—and they’ve had a head start. In 2008, trade with the U.S. accounted for over 8% of China’s GDP. Today? Just over 2%. They haven’t recycled trade surpluses into Treasuries since 2014, preferring gold.

The 1970s oil embargo lasted just 5 months. But it quadrupled oil prices, halved the stock market, and triggered long-term inflation. That’s how powerful a shock can be.

Today, we face a parallel:

• A raw material embargo from China
• A fractured global trade framework
• A weakening dollar
• Rising economic uncertainty

In the 1970s, the dollar de-pegged from gold in 1971 (the Nixon Shock). The embargo followed in late 1973. In 2025, both shocks hit simultaneously.

The “Rose Garden Shock” and the “China Embargo Shock” are real.

The Market’s Message: Gold / Silver

Want a simple way to see today’s uncertainty? Look at the gold-to-silver ratio. Or the S&P-to-oil ratio. Or gold-to-oil. Or the un-inversion of the yield curve (which has a perfect record of predicting the last 12 recessions).

The gold/silver ratio reflects a strong bid for monetary safety over industrial metals or natural resources. Gold is soaring—not just as a hedge, but as a sign of major capital flow disruption. Silver, typically more industrial, will follow as easing begins.

Gold’s current peak ratio over silver has only been exceeded once in modern history—right after the COVID lockdowns.

This is all unfolding just three weeks after the Rose Garden Massacre.

The Federal Reserve remains on hold—too tight—despite all signals. The TGA and overnight repo facilities are nearly empty. Liquidity is drying up. The Fed is still doing QT, even as CPI and PPI weaken. They’re lagging behind the 2-year Treasury by ~75 basis points.

If you’re going to launch a tariff war, you need the Fed to have your back. That hasn’t happened. Gold/silver is the signal.

FMT has distrusted the Fed’s judgment for two decades—and with good reason. The more they misfire, the more they’ll be forced to ease.

When they do, we’ll be ready. In fact, we’ve never been better positioned.

The Sequence of the Commodity Supercycle

In both the 1970s and 2000s, commodity supercycles followed a similar sequence:

1. Gold leads as capital flows are disrupted and the dollar weakens.
2. Agricultural stocks follow as food demand meets weak-currency tailwinds.
3. Silver lags gold, then rips higher post-monetary easing.
4. Oil & energy producers begin to rise as economies unfreeze (which can be seen in an easing gold/silver ratio).

2025 is lining up the same way as the 1970s and 2000s (and the 1930s).

Natural gas has been strong and is likely to run again alongside oil based on underlying supply/demand dynamics.

Most are still in denial about this new era unfolding. They’re extrapolating the past. But this is only the fourth major shift in market structure since the 1920s. Social consensus won’t save them. Capital flows and valuation trends can.

FMT is ignoring the crowd and aligning ourselves with history, capital flows, and value.

In Closing

The Fed is too tight. Liquidity is drying up. Tariffs are shockingly high. Supply chains are under siege. Capital flows are shifting. Markets are spooked. And yet—we are entering one of the most exciting opportunities of our investing lives.

Welcome to the start of the Supercycle.