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Meltdown
Donald Trump tried to put on a brave face Friday, but he wasn't fooling anyone: The situation on Wal
So tired of winning….
I keep picturing Trump sitting in the Oval Office looking at his (silent) cell phone- waiting for it to ring. He just can’t believe that world leaders aren’t rushing to get through to him and shout out, “mea culpa”!
Keeping in mind the differences in systems: Liz Truss moment much?
SPX craps 80 handles last 15 mins of day. Setting up EPIC daily expected move of $208 for Monday.
I hope you’re right, but right now don’t see a path on how he is going to walk this back without losing too much face. Would another -10-20% really do it? I mean if it gets to that, he may be better off just resigning, or he will be the laughing stock for 4 long years.
Would be very keen to hear what paths may be viable to him.
The way we’re going, we’ll be there by Friday.
Michael Cembalest from 3/12/2025
https://privatebank.jpmorgan.com/nam/en/insights/latest-and-featured/eotm/fifty-days-of-grey#:~:text=Here's%20the%20interesting%20thing%20about,and%20it%20cannot%20be%20seized%2C
“Here’s the interesting thing about the stock market: it cannot be indicted, arrested or deported; it cannot be intimidated, threatened or bullied; it has no gender, ethnicity or religion; it cannot be fired, furloughed or defunded; it cannot be primaried before the next midterm elections; and it cannot be seized, nationalized or invaded. It’s the ultimate voting machine, reflecting prospects for earnings growth, stability, liquidity, inflation, taxation and predictable rule of law.”
Yeah, but see here’s the thing: He’s wrong. And he accidentally admits as much when he mentions the rule of law. The stock market can be seized nationalized and invaded, and it’s probably going to take something like that — e.g., Trump saying “The stock market’s closed from now until I say it’s open again” — for Wall Street to wake up to the existential nature of the risk inherent in Trump’s autocratic intentions.
The fact that it may be somewhere on the probability curve is alarming. Even though it may be way out on the tail.
Gloat as we may, from a human perspective this looks to be a tough weekend for the president. Not only has the stock market turned on him, now his friend Xie has joined his friend Putin in doing so as well. (What are the betting odds that Rocket Man piles on this weekend?)
It’s not hard to imagine some pretty horrible outcomes for both the president and the country.
well when you SBA Admin is married to the CEO of the NYSE, shutting it down shouldn’t be too hard!
Perhaps he will botch the climb-down as badly as he botched the ramp-up.
I’m not immediately seeing how he could, but I Have Faith.
Or perhaps externalities will intervene.
10Y auction Wed, 30Y Thu.
China could twist the knife.
What does Laura Looper advise?
I’m not hip to the world of cosmetology but I thought Brave Face might be some kind of product.
Let’s hope he spends a quiet and productive weekend figuring out how to pin this all on Biden so he can save brave face by reflexively reversing everything on Monday.
I guess playing the fiddle by firelight has been replaced by golfing
Vietnam is showing the way. From CNN (hopefully the special characters survive the cut & paste):
“Earlier today, President Donald Trump wrote in a post on Truth Social that he had a “productive” call with Vietnam’s General Secretary Tô Lâm.
He said Lâm told him, “Vietnam wants to cut their Tariffs down to ZERO if they are able to make an agreement with the U.S. I thanked him on behalf of our Country, and said I look forward to a meeting in the near future.” ”
This gives Trump a face saving path to walk back some of the new levies, the market will then react with a resumption of the, “He’s just doing this as a temporary negotiating tactic,” presumption, and we get a bounce. Just a few problems of a more long-term nature:
1) Something like 200 entities each need to get in line and have themselves a chat (that’s roughly 180 countries and a few dozen penguin-led consortiums).
2) China and the EU. The EU does everything at a glacial pace. Even if they decide on appeasement, it’ll take quarters to work out. China on the other hand won’t want to lose face by bending the knee & kissing the ring. They’ve already announced their retaliatory measures as reported here earlier.
This is still very much a wait-and-see. The implementation will lead to the kind of supply chain chaos that had over a hundred ships backed up at the port of Los Angeles a few years back. Hopefully Sean Duffy is more up to the task than Pete Buttigieg was. Huge amounts of damage already done will take weeks to months to come to light. Nintendo pushed back the rollout of the Switch 2, leaving children no choice but to play with actual sporting equipment. Cats and dogs living together, mass hysteria! Where was I?
Good time to own warehouses in Vietnam I guess.
I’m sorry to say it, but I don’t want to see ANY country capitulate. Not to hurt Trump, but to hurt the voters that put him back in office. THEY need some very hard schooling on so many levels, I don’t even know where to begin. Honestly, the end of American exceptionalism isn’t necessarily a bad thing given our history of abuse on so much of the world in decades past, though of course I note that I am a beneficiary by having the foresight to have been born here. And also that someone else’s exceptionalism could be even worse than ours has been. A sticky wicket, for sure.
I think he knows these policies are crashing the economy. I am starting to think he doesn’t care. Are we at the front end of economic pain severe enough to firmly consolidate his power and buy back America on the cheap? The whole time having convinced the gullible that the pain they are experiencing is solely for their benefit? If so, it sounds like a master con, and evil enough to maybe work.
We need a “weekend free of his insane bullsh*t.” You are the best writer, H. Smart, analytical w/ range, but also funny in a way to which I relate (and grew up around). I know you were serious (and I agree) but the way you said made me laugh.
He’s hosting a fundraiser tonight in Fla. LOL. I wonder if anyone will cancel. He won’t be able to get away from the headlines about King Donald causing the market to tank. Baby King. He lacks empathy so no one should expect him to give a darn about the market tanking except as it reflects on his “very large brain” and may undermine his power.
SNL should be good. Penguins and all.
I need more than a weekend TBH. Like, never again.
If we go limit down on Monday and credit spreads start blowing out, then he will start looking for a scapegoat mighty quick, and Lutnick may be gone by Friday, as he pivots from this trade policy debacle. I bet some Republican Senators will start distancing themselves from all this insanity on the Sunday morning talk shows.
If the EU wanted to play this , Monday afternoon start whispers to a source in the WSJ about tariffs on services in the planning stages.
Having pooped in the global economics sandbox, it’s high time to move on to something new. The bolder, the better. Ah yes, let’s nuke Kyiv, thus ending the Russian-Ukrainian conflict as promised. Promises made. Promises kept. And all the concerns over tariffs will magically fade away. ( But, just in case – we will need an illegal immigrant Biden DEI hire in the Pentagon to blame for the rouge mission. wink wink )
H-Man, while not the sharpest knife in the drawer, he is learning how to manipulate the markets. Sunday may be the day of the major announcement there are deals with countries, the biggest and best deals ever. These deals, some people say, are the best deals that have ever been negotiated. And because of these great deals, which will make trillions of dollars for the United States, we can suspend the tariffs on the following countries: ______________.
Market goes through the roof. He is learning how to turn the water off and on.
What’s your take on this whole ‘This is difficult but necessary, we got to drop rates to refi the debt!’
But he’s saving tiktok!
Trump’s typical responses in a self-inflicted crises:
1.) Double-down, ignore the advice of others, and then go on the attack.
2.) Make a deal with anyone, and then declare a “total victory,” before quickly moving on.
3.) Fire someone, blame everything on others, and then describe the whole matter as “disgusting and disgraceful.”
He has really painted himself into a corner this time.
Correction: in a self-inflicted crisis . . .
Trump may not cave so quickly:
– Fox news (to which Trump is sensitive) is running stories about how the markets are panicking but this is just a buying opportunity; Jobs reports are great (no mention its a lagging indicator); Tariffs are all about bringing good jobs to America; Trump is standing strong for us; etc.
– MAGA true believers have religion (in many cases quite literally e.g. Prosperity Christians) and not stocks
– Don’t know how much support he gets from them but suspect this drop is not hurting the Top 800 (those with 50% of the wealth)
Of course its untenable in the long run, but as others have pointed out, many face saving exit strategies, e.g.:
– Worked out many great deals (these countries are lowering their tariffs, those companies are moving jobs to America…)
– Go after Powell (inflation’s his fault, high mortgage rates are his fault, he’s undermining the tariff plan, doesn’t care about jobs, etc)
Doubt he will can anyone close to him since he “owns” tariffs himself and can’t say he got bad advice.
Meanwhile, the magicians “other hand” is working the Senate via the fabled mathematician Lindsy Graham to declare tax cuts for the wealthy officially “reconciled,” which will likely mollify many.
At this rate, there will be no profits and capital gains to save tax on, no matter what the lower rates are 🙂
While Trump’s tariff rhetoric often grabs headlines, the real focus of his agenda, I believe, seems to be one key goal of extending the 2017 tax cuts and it is this that is the reason behind much of his seemingly anarchic actions.
Extending these tax cuts is critical for Trump. Without action, Americans will face a major tax hike when they expire this year. Passing the extension would also give Republicans a strong platform heading into the 2026 midterms. Trump isn’t running in 2026, but he knows how damaging it was to lose Congress in 2018 and wants to avoid becoming a “lame duck” again (as happened in the last two years of Trump 1.0). To get the extension passed, Trump is likely pursuing a few key strategies:
• Negotiating with Congress on spending cuts
• Raising revenue through tariffs
• Cutting government spending through DOGE
• Pushing for lower interest rates to reduce the federal debt burden
Trump also understands, I think, how fragile the Republican majority in the House is and his tough talk may be partly designed to hide this weakness. His recent comments about being “open to negotiation” and “doing a deal” suggest he knows he’s in a tight spot and might have overreached. I will be watching to how global players like China and the EU respond (whether with retaliation or new trade partnerships between each other that sideline the U.S). These moves could shape the investment landscape going forward.
Speak of the devil, I keep hearing this talking point over and over ‘we just got to lower spending and interest rates to lower debt service’. Like there is no other way forward?
Don’t read too much into comments from (apparently) Sean Hannity.
Totally agree with the scepticism, and just to be clear, I’m not endorsing those solutions as the way forward. The point I’m making is that this is how Trump appears to be positioning his fiscal strategy, whether it’s realistic or economically sound is another matter entirely. His playbook seems to involve justifying the tax cut extension through a mix of spending cuts, tariffs, and interest rate pressure, even if that’s politically or practically shaky.
My aim was to break down what’s motivating his actions, not to validate them. And for clarity, I’m not a Trump supporter nor do I have any alignment with Sean Hannity (quite the opposite, actually). My interest here isn’t about echoing partisan talking points, but rather trying to read between the lines of Trump’s messaging. The fact that he brought up the tax cut extension (even in that setting) felt like a clear signal of what he’s prioritising behind all the noise. I think it’s worth unpacking, regardless of the platform, to try and work out where things might be headed from here.
Sorry, Sean, it’s not that you incorrect on those points (Trump wanting to flout how he “saved” money to justify tax cuts to the wealthy). But don’t overthink it…..he has no ‘playbook’ after that, he’s shooting from the hip. AND I think he has zero clue what his giant tariffs represent, both figuratively and literally.
And honestly, it was just too easy to make a snarky comment based on your moniker. Sorry for the cheapshot : )
I agree this is the ‘strategy’. I guess I’m just looking for re-assurance that any time US debt (or even using the word ‘debt’) is spoken of in terms of a household budget it’s a overt red herring!
Paragraph seven we are given a personal guarantee, and I truly thank you. I’m a long time reader/follower (back to the SA days) and this seems unprecedented, or close enough to be called so. Once again thank you.
Well, remember: Nothing published here is investment advice. That should go without saying, but just in case, not investment advice. Also, don’t under-appreciate this line: “…I’ll concede [Trump] may try to see it through for a little longer if he thinks the humiliation of backing down would be worse than the embarrassment associated with presiding over a market crash and a recession during the first six months of his second term.”
Even if he does back down and change course in a week or two, the damage with Corporates is done. I worked twenty-five years at a Dow 30 industrial. I’m certain that the Executive Office is having FP&A run different scenario analysis on cutting CAPEX and discretionary expenses. Even if the Administration changes course, a recession may be baked in for 2H 2025.
Trump is getting older and maybe more senile every week. I don’t know what he may do.
I’m hoping House republicans will cave before trump. Motivated by midterms risk, fielding even a potentially veto-proof tariff approval bill giving Congress the power to unwind the stupidity might provide them enough leverage to force trump to declare victory and move on to something less idiotic. Even Cruz, whom I detest, was sounding the midterms alarm this weekend.
Sadly, no matter what DT does now, it won’t be trusted, even is he capitulates. He is losing all credibility. He needs a war, again, sadly.
No way this is going to be “undone”. Too ingrained in our global economy.
https://www.marinetraffic.com/en/ais/home/centerx:-173.5/centery:16.1/zoom:2