It’s all about tariffs this week. That goes without saying.

A benign scenario finds the Trump administration dodging a gap lower out of the gates, managing the message and talking equities off the ledge.

A not-so-benign scenario sees another big downdraft at the start of the week and a recalcitrant Donald Trump doubling and tripling down on the bombast in a self-destructive bout of hyper-psychosis.

We’ll see how it goes. In remarks to the press over the weekend, Scott Bessent and Kevin Hassett didn’t suggest Trump’s anywhere near a pivot. For now, we’re led to believe Howard Lutnick’s in an active dialogue with America’s trade partners, which is probably true, but I rather doubt those discussions are uniformly constructive. There’s only so far you can push people, and resorting to nonsense math to justify what, in some cases, are draconian taxes, will be a bridge too far for many nations.

That’s not to say Trump can’t wring some concessions out of people, but as Hal Brands did a good job of elucidating in a Bloomberg Opinion piece published April 4, the tariffs, when considered with Trump’s unconscionably adversarial approach to relations with America’s traditional geopolitical allies, risk an overnight, and quite possibly irreversible, diminution of American influence around the world. So, the polar opposite of what Trump’s promising.

For what they’re worth, the scatterplots below (click to enlarge, as always) give you a sense of the relative move in the VIX and vol-of-vol versus the S&P in recent days. The charts look fancy, but they’re actually quite simple: They just show the rolling five-session point move in the VIX and VVIX plotted with the rolling five-session percentage move in equities.

I included annotated markers for two notable vol events from last year: The August 5 growth shock and the post-December FOMC trade. One implication is that although the VIX outperformed its one-year relationship with stocks last week, vol-of-vol didn’t. At least from the perspective of the VIX complex, the August shock (which, you’re reminded, was a history-making vol event, fleeting though it was) was more pronounced.

My intuition is that in light of the grinding selloff which preceded the post-“Liberation Day” fireworks, at least some market participants were hedged. Relatedly, the demonstrable deterioration in sentiment prior to the “reciprocal” tariff unveil left positioning decidedly “cleaner,” where that just means de-risked. Again, that’s just me riffing off the cuff.

The overarching message from my weekend editorializing is that this is still salvageable from a markets perspective, if not from any other perspective. Trump can still do damage control here. Or he can do more damage. It’s up to him, but this needn’t morph into a total calamity. The die’s cast in a lot of respects — most of them more important than the stock market — but the administration can still avoid a scenario where the fallout from “Liberation Day” lives in infamy on annotated charts of the US equity market’s worst catastrophes.

As readers have pointed out, it’s not clear Trump cares, though. Nor Peter Navarro. Nor Howard Lutnick. Scott Bessent cares, but he’s not allowed to say so. The likes of Bill Ackman (and you can take “the likes of” however you want) are clinging, desperately, to the idea that Trump’s not going to drive the car off the cliff.

“Why wouldn’t a pause make sense to give the president time to properly resolve this critical issue and to allow companies large and small the time to prepare for changes in their supply chains?” Bill wondered, on “X,” after spending four paragraphs flattering Trump, which is required if you’re going to subsequently say anything that might be construed by The White House as even remotely critical. “The risk of not doing so is that the massive increase in uncertainty drives the economy into a recession, potentially a severe one.”

Yes, Bill, that is “the risk.” And maybe that’s what it’s gonna take to wake everybody up to the folly of putting the fate of the world in the (tiny) hands of a man we all know can’t be trusted with that kind of responsibility. The “peril of the unserious,” as I put it in the latest Weekly.

There’s some data on the calendar in the US this week, most notably the March CPI report. It’s expected to show underlying price growth picked up to 0.3% MoM, even as economists anticipate prices were mostly unchanged in aggregate (consensus for the headline gauge is a 0.1% monthly advance).

Recall that core CPI actually came in relatively cool for February. Indeed, core PCE outperformed core CPI that month.

The inflation update will take a backseat to the tariff drama. With Trump, everything that didn’t happen five minutes ago is old news, and the CPI data’s from last month. Obviously, the USTR’s tariff equation (Trump’s “final solution” for trade imbalances) poses enormous upside risks to goods prices, but it’s impossible to know whether and to what extent, the figures Trump presented on his giant piece of poster board last week will actually be implemented.

In remarks at an event in Virginia on April 4, Jerome Powell made it clear that risks both to inflation and unemployment have risen in recent weeks as a direct result of Trump’s policies. If the Fed was in a tough spot before, they’re in a real pickle now. If applied as advertised and sustained, Trump’s “reciprocal” tariffs will torpedo growth and lead to higher prices, at least until job losses manifest as deflationary demand destruction.

As a quick aside, citing that latter effect in defense of Trump’s tariffs — i.e., asserting that because a 10-fold increase in the average US tariff rate will surely trigger a deep recession, and deep recessions are associated with household retrenchment and a wholesale loss of corporate pricing power, tariffs are thereby deflationary — is about like saying that because dead people can’t experience depression, suicide’s a good remedy for bad moods.

Also on the US docket this week: NFIB, PPI and — drumroll — the preliminary read on University of Michigan sentiment for March, which’ll be accompanied by an update on household inflation expectations (that oughta be good, or bad, depending on how you want to look at it).

In the same social media post mentioned above, Ackman said he only knows “one thing for sure,” and that’s this: “Monday will be one of the more interesting days in our country’s economic history.”