Policymaking Protest Assets (PPAs)

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Amidst all the noise, markets haven’t had time to digest 5 key macro news:1) Elon Musk announces formation of ‘’America Party’’2) Speaker Mike Johnson: "We're gonna have a second reconciliation package in the fall, and a third in the spring of next year..."3) President Trump: ‘’ “Stock markets are now at all-time high -- we’re going to maintain it, believe me.”4) Bessent: We could appoint new Fed chair in January, nominating in October5) OMB Director Vought sends official letter to Powell saying ''Chairman Jerome Powell has grossly mismanaged the Fed''Musk’s America Party might as well cost the Republicans both the Senate and House in the 2026 mid-terms. That’s a big political risk for Trump.The response from the Trump administration is very clear - run the economy hot. More fiscal stimulus with reconciliation bills on the table again, and dovish pressure on the Fed.The interference with the Fed independence is increasing by the day, with clear attempts to find ''cause'' to fire Powell (e.g. ''gross misconduct'' mentioned by Vought).If you run the economy hot with inflation already above target and force a dovish reaction function at the Fed, our asset allocation model moves towards the ''Everything Rally'' Quadrant:Historically, the best asset mix for this scenario is to get rid of USDs and underweight long-end bonds and buy:1) Assets denominated in USD that produce inflation-proof cash flows;2) PPAs: Policymaking Protest AssetsWhy do these assets perform well in such a macro environment?Trump's plan with tariffs, fiscal and lower front-end real rates means that real growt…