Welcome to the Forward Guidance newsletter, brought to you by Casey Wagner, Ben Strack and Felix Jauvin. Here’s what you’ll find in today’s edition:

• You’ve heard a lot about Trump’s tariff plans and their potential economic impact. Here’s Felix’s take. 

• Casey unpacks crypto’s latest FBI raid. 

• As crypto M&A has picked up this week, one advisory firm founder tells Ben: “It's clear the tide is shifting.”

Unpacking Trump’s potential tariff policies

As investors and market participants begin to digest the impact of Donald Trump’s win and the red Congressional sweep that came with it, the focus is now on trying to unpack how Trump’s unique perspective on economics, global trade policy and the global American security complex will play out.

Many things were said during the campaign. The difficult part of trying to gauge which promises are both realistic and probable now begins. 

This week I sat down with Dr. Stephen Miran, fellow at the Manhattan Institute and senior strategist at Hudson Bay Capital. Miran was also at the US Treasury during the first Trump Administration. 

His latest economic paper provides a toolkit of how to unpack and understand a world of increased global tariffs and other protectionist economic policies. 

Titled “A User’s Guide to Restructuring the Global Trading System”, the paper is a fascinating roadmap into understanding the ultimate question surrounding a heavyhanded tariff policy: Will it be inflationary or not?

Stephen began our interview discussing the “Triffin world” we live in. Simply put, a Triffin world is the consequence that comes with being the global reserve currency. 

The dollar’s status has for decades resulted in an overvalued currency (when compared to interest rate parity theory) and persistent and rising twin deficits (both a fiscal and a trade deficit). 

A Triffin world can quickly become a crisis for the reserve currency issuer - i.e a Triffin’s dilemma, when the total share of global GDP secularly declines — like it has for the US in recent years:

Because of this, deficits widen and further strain the priorities of the reserve currency, creating an imbalance between domestic and international priorities. 

As proposed by Trump and analyzed by Dr. Miran, one way to “recalibrate” this strain is through either tariffs that rebalance these trade imbalances or an outright currency devaluation that brings the US dollar back in line with interest rate differentials. 

The big question from here is what could the impact of a tariff-heavy policy on domestic inflation be? How much of the price increases gets passed onto consumers? 

As Dr. Miran analyzes in the paper, the key to this question lies in how much the currency offsets the increase in price:

Further, one of the key considerations for these tariffs being implemented is the context of the business cycle that we are in, as this will, in part, determine the tariffs’ success. 

The other side of the coin that the paper and interview discuss is outright multilateral and unilateral currency agreements and how they could also help recalibrate the USA from spiraling into a Triffin dilemma. 

As for understanding the specifics of what style of currency agreement would work best, well you’ll have to listen to the interview to find out. 

— Felix Jauvin

Republicans will maintain control of the US House of Representatives, according to the latest projections that have the GOP snagging the required 218 seats to take the majority. 

It’s a hard-fought, narrow-margin win — but a win nonetheless. With Republicans now controlling the White House and both chambers of Congress, President-elect Donald Trump’s sweeping economic, immigration and foreign policy plans face a likely clearer path to approval.

News broke yesterday afternoon that the FBI had seized Polymarket CEO Shayne Coplan’s phone. 

The raid is associated with a criminal investigation into whether Coplan and Polymarket are operating an unlicensed commodities exchange in the US, the New York Times reported. That would be in violation of the company’s 2022 settlement agreement with the CFTC. 

Coplan first addressed the reports with a post on X: “new phone, who dis?” 

Two hours later he followed up with a longer statement, claiming the outgoing administration is going “after companies they deem to be associated with political opponents.” 

“Polymarket has provided value to [tens] of millions of people this election cycle, while causing harm to nobody,” he added. “We're deeply proud of that.”

The question at hand is, of course: Where are these people located? Polymarket is required to block all US persons. They may be blacklisting US IP addresses, but VPNs exist, and various how-to guides show there are ways around the rules. 

Though Kalshi, another betting platform, recently got the greenlight to trade US election contracts, the CFTC is trying to appeal the court’s decision. Kalshi notably requires customers to verify their identities — a KYC element Polymarket does not collect.

If this really is Polymarket’s second strike, I’d imagine regulators aren’t pleased. We’re a long way out from knowing what will come of this alleged investigation, but I’m betting something is going to change. 

— Casey Wagner

It’s been a busy week for crypto M&A — a signal the post-election sentiment shift could be a catalyst for even more such deals. 

Architect Partners founder Eric Risley noted that crypto regulatory uncertainty in the US has put a damper on M&A activity, given the country’s “outsized influence” on that front.

But Donald Trump’s election victory has spurred crypto price momentum, in part due to industry expectations around greater regulatory clarity and a less antagonistic approach to the segment. 

“It's frankly too early to have a clear vision as to exactly what those regulations will look like or timing,” Risley said. “However, it's clear the tide is shifting.”

Since hitting a peak in March, trading volumes have been roughly flat over the past six months. The number of crypto M&A deals shrunk from 50 during the second quarter to 35 in Q3, Architect Partners data shows.

“Perhaps we're now at a new level of sustainable volume which is a major factor in the growth and profitability of trading-related crypto businesses,” Risley explained. 

Six of the 22 crypto M&A deals so far announced in Q4 were revealed this week. 

That includes two asset management-centric transactions shared yesterday: Bitwise’s buy of Ethereum staking provider Attestant and an intended merge between Arca and BlockTower. Then this morning, Crypto.com said it bought Fintek Securities, a brokerage service and trading company with an Australian Financial Services Licence.

And let’s not forget the other big deal last month (Stripe’s buy of Bridge), which Risley said “caught senior executive and board level attention across a broad array of crypto and traditional financial services companies.”

The tldr? Crypto M&A developments could accelerate in Q4 and 2025, perhaps serving as a barometer for the sector’s trajectory.     

— Ben Strack

• Casey wrote yesterday about Donald Trump’s cabinet. The president-elect’s picks since then include Matt Gaetz as attorney general and Tulsi Gabbard as director of national intelligence.

• Pennsylvania lawmakers introduced a bill that would allow the state’s treasury to hold bitcoin on its balance sheet, FOX Business reported Thursday. 

• Stablecoin issuer Tether announced the launch of its Hadron platform Thursday in a bid to make asset tokenization more accessible. The platform seeks to open “new avenues for issuance, investment and core capital markets technology for a broader audience,” including institutions, fund managers, governments and private companies.

• Bitcoin’s price was about $89,150 at 2 pm ET Thursday — 1.5% lower than 24 hours ago. ETH saw a similar decline over that period, dropping 1.8% to roughly $3,130. 

• You can read Ben’s full interview with Jersey City Mayor Steven Fulop about the city pension fund’s upcoming allocation to bitcoin ETFs here.