Rob Citrone and Karen Karniol-Tambour at Sohn 2025

Summary

• Karen Karniol-Tambour’s framing: the 15-year paradigm of globalization, US security umbrella, and easy money — where “the best thing you could have held is a simple S&P 500” — is giving way to “modern mercantilism,” and markets have “barely started pricing” it in. Unlike 2010, US assets now start from pricing that assumes America “keeps beating everyone,” making concentration in the US the key vulnerability.
• Rob Citrone runs 70% of his risk outside the US and half in EM, with Latin America the core call: Milei’s Argentina as the template and four elections in Peru, Colombia, Chile, and Brazil over the next 18 months to “usher in substantial change.” Rates are high and currencies cheap, while he sees opportunities across equities, currencies, and credit — Argentina and Mexico are his favorites, and “Brazil in ‘26 can be the best performing market in the world,” hedged by worry over Lula and 500bps of recent hikes.
• The sharpest disagreement is US rates: Citrone sees the 10-year hitting 5–5.25% this year, no Fed cuts, and a 2026 US boom from tax cuts and reshoring; Karniol-Tambour agrees on the ‘25-pain/‘26-stimulus sequencing but takes the trade abroad. Her logic: foreign central banks face a tariff slowdown “not created by them” without the same inflationary impulse, easing is not heavily priced, and some non-US fixed-income markets face “once every 10 to 15 year type size” pressures.
• Karniol-Tambour explicitly shorts the dollar against the euro and yen, arguing the dollar move so far is only fast money and the slower governance-driven flows are still ahead. Her bottom line on risk allocation: “it’s not the best time ever to take risk but mostly take it outside the United States.”
• Karniol-Tambour’s counterintuitive winner: her China-only and Asia ex-China funds have been her biggest performers precisely because she didn’t just buy the stock market — profiting from weak growth via bonds and currency devaluation. The meta-point: “this is a great time to not be stuck in a paradigm that says I only buy stocks and I only buy US stocks.”
• Citrone bought oil at $55–58 on Iran/Israel risk — “there’s no way that Israel is going to allow Iran to stay nuclear… I think something happens soon” — while Karniol-Tambour tactically prefers gold. Citrone argues that crowded long positioning in gold and short positioning in oil could produce a near-term oil spike with gold lagging.
• Citrone’s single-name pick is América Móvil (AMX): 10% free cash flow yield, ~4x firm EBITDA, 10% growth, 7–10% annual buybacks, Carlos Slim as anchor — “you can trust Carlos” — a $55B name benchmark investors barely own.

Deep dive

1. “Modern mercantilism” challenges the S&P-only era — and markets have barely repriced

• Karniol-Tambour’s opening frame: decades-long returns are driven by secular paradigms, and investors have operated in one — globalization, US security umbrella, deflation, and easy money — that made the fee-free S&P 500 unbeatable for 15 years. The successor she calls “modern mercantilism”: states maximizing national wealth, self-sufficiency, treating trade deficits “as a transfer of wealth,” and handling allies “in much more coercive ways.”
• The tradeable asymmetry: “markets have barely started pricing” the shift, and unlike 2010 — when the world priced much lower US profitability — today’s starting point assumes the US keeps winning.
• Citrone’s addition: global investors are “so long corporate America in every kind of asset” — private equity, private credit, venture, equities — and the unwind “is probably just in the early stages.” His counterpoint: US exceptionalism in the private sector — technology, financial services, and capital markets — “is still here,” so money will not leave easily.

2. A siloing world makes Latin America the left-for-dead opportunity

• Citrone sees the world splitting into Americas, Europe, and Asia blocs, with LatAm “left for dead for the last 25 years since the Tequila Crisis” now seeing the thing he screens for first — management change: “Milei in Argentina is the best example of that. Good management, good policies,” potentially spreading via elections in Peru, Colombia, Chile, and Brazil over 18 months.
• Karniol-Tambour’s diversification sermon, with the episode’s best image: the Monday after DeepSeek, “NVIDIA’s market cap fell… by two Mexicos.” Market-cap-guided investors are “extremely concentrated in the United States, extremely vulnerable to a world where the US doesn’t just keep beating everyone” — real diversification means countries with “a different beat of the drum” in growth, inflation, and monetary policy.
• Both stress liquidity and shorts: illiquid-heavy portfolios cannot respond to the repricings both expect, and “you have to be dynamic.”

3. The rates split: Citrone’s 5%+ tens and a 2026 US boom vs Karen’s foreign-bond long

• Citrone’s out-of-consensus call: the 10-year hits 5–5.25% this year, the Fed does not cut at all, and 2026 is “a boom” on fiscal tax cuts, with fewer spending cuts than advertised, reshoring, and post-tariff-uncertainty spending — “next year is going to surprise everybody.”
• Karniol-Tambour identifies the US and Japan as the two clear rate shorts. She agrees on sequencing — ‘25 is tariff pain, ‘26 stimulation, and the faster uncertainty is bought down, the faster reshoring escapes “the paralysis mindset” — but says the Fed cannot proactively ease into stimulus when tariff inflation with supply problems looks more like a cost-push shock. Foreign central banks face a more deflationary shock, and “there’s not a lot of easing priced in.” She also argues that Treasuries began this environment with little apparent risk premium relative to cash, so some risk premium is reasonable.
• Karniol-Tambour wants to play where rates can fall “thousands of basis points,” or at least hundreds: Brazil, Mexico, Argentina, and Turkey. She calls the UK the most attractive developed-market option, while saying, “I don’t know Europe… a lot’s priced in.”

4. Short the dollar, own China without owning its stocks, and the hollowed-out fixed income desk

• Karniol-Tambour shorts the dollar against the big crosses — euro and yen — arguing moves so far reflect only speculators and quick hedgers, while the big slow-moving flows “take a while to work through governance.” Overall risk stance: “not the best time ever to take risk,” and mostly take it outside the US.
• Her most counterintuitive result: China-only and Asia ex-China funds as biggest winners despite weak stocks — money made in bonds and a devaluing currency, because “there’s no reason to invest” as if the stock market were the only instrument.
• Neither offers a broad single-name credit view: Citrone likes sovereign spots that “pay a lot” — Argentina, Nigeria, and Ecuador. Karniol-Tambour’s structural point is that institutional fixed-income capability was “hollowed out” by the migration to private credit, which carries “equity-like risk.” Duration and currency are alpha spaces “coming back in a big way,” even as some investors remain restricted to US Treasuries.

5. Oil vs gold, and one stock: América Móvil

• Citrone bought oil between $55–58: “we can’t underestimate the risks in Iran and Israel… there’s no way that Israel is going to allow Iran to stay nuclear. Something’s going to happen… soon.” Near-term risk-reward is “phenomenal”; long-term, “I’m not sure.”
• Karniol-Tambour does not tactically like oil but sees the commodity complex as a previously ignored set of useful assets in a world with more inflation risk; she prefers gold tactically. Citrone adds that gold has had a big run and is crowded long while oil is short, so he sees a possible near-term oil spike with gold lagging.
• Citrone’s favorite single name: AMX — pan-LatAm exposure, “huge moats,” 10% FCF yield, ~4x firm EBITDA, 10% growth, 7–10% annual buybacks, Carlos Slim as major holder, $55B cap — exactly the kind of name a benchmark investor holds at irrelevant weight. Closing through-line from Karniol-Tambour: their portfolios are “some of the most different from what everybody’s holding” — the right moment to ask “where else can I be in the world?”