Maybe you noticed, maybe you didn’t, but these last three weeks were “perhaps the best ever.”

That’s according to Donald Trump, who was fired up Thursday for reciprocal tariffs, the next step in his spasmodic quest to right the world’s wrongs with import taxes.

The market’s kinda, sorta ignoring the trade headlines again, not necessarily because they aren’t foreboding, but rather because it just isn’t possible to draw any definitive conclusions about where this is all going. I don’t think there’s a plan and if there is, Trump, whose TruthSocial caps lock was stuck for most of Thursday morning, isn’t letting on.

I don’t pretend to be saying anything especially scientific here, but it feels like markets might be sleepwalking into problems, much as America’s sleepwalking into illiberal democracy.

Notwithstanding the “It bodes well for PCE” spin around Thursday’s wholesale price update, the PPI release, to say nothing of the CPI report, covering January didn’t suggest the Fed’s disinflation narrative was intact at the beginning of 2025. The opposite, in fact.

The figures below, from JonesTrading’s Mike O’Rourke, give you a sense of how alarming the CPI-derived “supercore” overshoot documented here yesterday really is, if you suspect it’s not a one-off (and it very well might be).

Plainly, supercore inflation’s not going to run 0.80% every month in perpetuity. The point is just to emphasize that this “bump in the road,” as the Fed’s fond of characterizing setbacks, was pretty big. “The FOMC was already handcuffed by its 100bps of easing at the end of 2024,” O’Rourke said. “The CPI report throws away the key.”

Meanwhile, households are palpably concerned about the read-through of tariffs. Apparently, a lot of federal employees will lose their jobs in the months ahead, and while many will find work in the private sector, some won’t, and fewer paychecks means less spending.

Even as Jerome Powell’s determined that the disinflation “story” is “still there,” as he put it in December, he acknowledged this week that in light of stalled progress, additional rate cuts are unlikely in the near-term, a sentiment Raphael Bostic underscored. “My view is until we have more clarity, it’s going to be impossible to make a judgment about where our policy should go and how fast and at what pace,” Bostic said mid-week. “So we’re just going to have to get more information before we’re going to be able to move.” (That’s not what Trump wants to hear.)

As for stocks, big-tech earnings failed to beat on the top-line for the first time in two years, and as BofA’s equity derivatives team noted, “fragility events” — instances where a top-50 S&P 500 name moves three standard deviations in a single session as measured by one-day returns relative to 21-day trailing realized, i.e., one-month rVol — are becoming more pronounced at the single-stock level.

According to BofA anyway, the average magnitude of such events is on track for a record in 2025 (see the figure above).

The DeepSeek shock triggered such fragility events for 70 S&P 500 names, the bank said. Needless to say, a lot of those 70 names are heavily-owned, richly-valued and comprise the “concentric circles” (h/t Charlie) of the AI/semi/big-tech thematic trade.

Again, the above’s just an off-the-cuff survey of what, to me, looks like a somewhat perilous setup. I’m not saying anything profound or breaking any new ground, but… well, O’Rourke summed it up pretty well.

“With earnings season unimpressive, growing trade uncertainty and monetary easing indefinitely postponed, it makes one wonder why would investors want to continue to stick around in one of the most expensive stock markets in modern history,” he said.