This week better not go like last week. Seriously, it better not.
If we all underestimated Republicans’ willingness to sell out American democracy in the service of installing Donald Trump as an autocrat, we’re probably overestimating the GOP’s patience for a stock crash in the service of what everyone knows is a nonsensical, economic suicide mission.
My view — and it’s certainly a minority opinion — is that a real crash which takes the S&P down, say, 50%, would see Trump impeached. Or risking impeachment, at least.
Some Republicans on the Hill are mobilizing to pass legislation limiting his authority to apply tariffs unilaterally. One bill which already has seven Republican co-sponsors would allow Congress, with a simple majority, to remove any president’s tariffs. In the event stocks were to collapse in earnest, that kind of legislation would surely gather more GOP adherents, setting up a clash with the White House. Things could spiral from there.
Obviously, we’re not there yet. That discussion’s premature. The selloff on Wall Street’s not a crash. The post-“Liberation Day” trade was crash-y, that’s for sure, but even after the worst two-session slide since COVID (and the second-worse since the GFC), the S&P drawdown’s only at 17%. That’s not even a bear market.
Still, the rapidity of the slide on April 3 and 4 — the escalatory nature of the losses — was concerning, as illustrated poignantly below.
Scott Bessent’s feigned intrepidity aside, a 10.5% haircut in the market value of corporate America over just two sessions should be viewed as a warning to the administration: Clean up your mess, or else.
Between Bessent, Kevin Hassett, Howard Lutnick and what, a few quasi-defections aside, still counts as almost uniformly sycophantic GOP support on Capitol Hill, Trump doesn’t need any more enablers. Wall Street needs to push back on this like their jobs depend on it, because they damn well might.
I’m going to try to be patient in the days ahead, and who knows, maybe stocks will recover and I won’t have to worry about it, but I gotta tell you, folks: I’m not sure I can conjure the stoicism it’ll take to suffer Wall Street strategy notes which pretend the farcical formula the USTR put out last week was anything other than dangerous buffoonery.
It’s not reasonable to ask, of people who depend on paychecks signed by other people, to say what really needs to be said about that tariff “equation” — namely that the US government is now enshrining Trump’s wholesale inanity into official policy applicable to global trade at the risk of a goddamn depression, with a “d.”
With allowances for that, it’s incumbent upon anyone with a spine to call the USTR’s math exercise misguided, and in unequivocal terms. To do otherwise is to lie, full stop.
Not that anyone on Wall Street cares — remember, my readership amounts to a very small cult following, and simply isn’t relevant in any grand scheme of things — but for what it’s worth, a strategist who tries to “sanewash” that USTR formula is a strategist you’ll never, ever see mentioned in these pages again.
Who wants to be lied to? What service are you providing to clients — who entrust you with billions of dollars — when you lie? That’s the question facing Wall Street strategists and the people who dictate what they can and can’t say, this week: Are you gonna lie to your clients or aren’t you? Are you going to enable this dangerous USTR farce which threatens your own livelihood, or aren’t you?
We know Trump’s gonna lie, miserable grifter that he is. And Bessent’s gonna lie too. So’s Hassett. On Sunday, Bessent told NBC Americans nearing retirement aren’t concerned about recent market turmoil. That’s a “false narrative,” he said. Hassett told George Stephanopoulos that in the end, US consumers won’t “see a big effect.”
For his part, Trump played golf. At some point between dragging 300 pounds of calcified burger grease around the links, he reposted a TikTok video with the title, “Trump is purposely CRASHING the market.”
Now, let’s see who on Wall Street’s going to tell the truth this week, and who’s a sniveling coward.
At least this is an informative cult.. Largely devoid of overt fallacies. I’ll keep drinking the cool-aid!
I wish I had your confidence that this can be walked back. I hear some of his defenders say the goal is to have even & fair trade and that this is just a negotiating tactic. But when I listen to Trump and Navarro they sound like guys who truly believe that tariffs are a good thing, and will make us lots of money, and bring back manufacturing jobs. It’s not a negotiating ploy for them, it’s the end goal. I also think there is a zero percent chance Republicans would ever impeach him. I sure hope you’re right and I’m wrong.
The stock market’s a helluva thing. If it recovers this week, he’ll be ok, same if it kinda meanders lower without anything too dramatic, but I’m telling you, if this turns into some kind of history-making crash, he’ll have trouble.
So when do we get our itinerary for our trip down to the compound in Guyana? I’ll bring the Flavor Aid!
Assuming the tariffs stay, what will really happen over the next 2 years? Media mentions adjustments to growth of negative 1-2%, but that’s nothing compared to fundamental issues like banks collapsing during the GFC. What would really happen and what would then be a logical consequence for stocks?
Are stocks going down because of lower growth projections or because a loss of credibility of the US? Depending on which it is, what would be reasonable? 30-50% downturns or a black monday type of day as propagated by some people, seems a bit wild to me.
You’re effectively asking whether it’d be bad if the entire global supply chain was shattered overnight. The answer’s “yes,” and as it turns out, there’s precedent for how bad that’d be: March of 2020, with the difference being that was something the entire world was determined to overcome. This is something the US, under Trump, is determined to perpetuate.
I don’t think people have a good grasp about the extent to which, as one reader described very effectively a few days ago, it’s a miracle, and not a small one either, that we’re able to have the things we have considering everything that goes into creating them and getting them onto shelves. That’s a project which took millennia to develop and refine. And we’re being asked to trust a reality TV show host with half a dozen bankruptcies under his belt, when he says it needs to be overhauled entirely and maybe even scrapped altogether.
I’m glad the USTR released that “formula” last week, which is to say I’m glad “Liberation Day” went as splendidly poorly as it did. Really I am, because it forced a lot of otherwise reluctant people to say, “You know what? I give up. He’s a moron. I tried and I tried, but he’s just a moron.”
I mean, seriously: That “equation” stands as one of the grandest, most unequivocal attestations in all human history to one man’s intellectual shortcomings. He literally forced the USTR to mathematize his stupidity, enshrine it in an equation and publish it publicly.
Next will be him parading around naked on the White House roof with a stovepipe hat, a scepter and a pair of galoshes shouting “I love blueberry muffins!”
Also, as to your question about what would be “reasonable,” I’d note that’s a moving target for people determined to deny reality, and not just in the context of stocks. If I’d told you on Wednesday morning last week that the S&P was going to fall 11% in 12 trading hours following the tariff unveil, you might’ve suggested that wasn’t “reasonable.” But that happened. If I’d told you, on January 5, 2021, that Trump was going to encourage a mob to ransack the US Capitol building, you might’ve suggested that wasn’t “reasonable.” But that happened too. If I’d told you the US Supreme Court was going to grant this idiot immunity from criminal prosecution, you might’ve suggested that wasn’t “reasonable.” That happened as well. And I bet a lot of people in Greenland probably would’ve thought it wasn’t “reasonable” that they might one day witness a literal invasion by the US military, but guess what?……………..
At some point, we, as a community of people who share this world and presumably don’t want it to end, might want to step back, look at the mountainous evidence, and ask, “Hmm, do we have a problem here, maybe, with this guy?”
I would love to see that happen. And I agree, I’m glad that the stupidity is very clearly out in the open.
I’m now also very curious about the ingenuity of people and businesses now that they might need to deal with this new reality, were it to be perpetuated.
Thanks for the updated reply. I get your point and I guess I will just have to brace myself for the next few weeks. Here’s hoping someone can talk reason into him or put a damper on any of his actions so far and going forward.
My point isn’t that stocks will or won’t crash. No one knows what stocks will or won’t do. My point is that no one, anywhere, should give this man the benefit of the doubt on anything ever again and, relatedly, that this charade where everyone keeps moving the goal posts for what counts as far-fetched vis-a-vis Trump is getting pretty old, and will eventually lead to ruin.
It can’t be the case that we only draw the line after he nukes somebody. Or invades Canada. At some point, the people with the power to do something — i.e., Republican lawmakers in the US — have to say to him, “Listen, we’re scared for the future of our children now, because when you say things like the border with Canada doesn’t exist, and we’re going to take Greenland by any means necessary and when you suggest Russia can just kill everybody in eastern Europe on the way to reestablishing the Soviet Union, it makes us think maybe our grandchildren are in jeopardy. So, with apologies, you’re going to have to leave office now.”
I don’t think even nuking someone, say Yemen or Iran, would cross the line with enough people to make much of a difference. (Sad Face Emoji!)
The simple answer is: Millions who planned to retire this year or the next, won’t. The bucks in retirement accounts, unlike pigs, can fly away. Every two years, our thoughtful founding fathers provided us with the convenience of a mid-term election. Not sure MTG and her cronies will be on the winning side. Becoming suddenly and unexpectedly dirt poor is likely to be quite unsettling to those subjected to this change.
Trump’s propaganda machine seems to be as effective as Hitler’s was. That machine kept Hitler in power until the very end. Who controls the machine Trump is using? Are all the Republican representatives really getting their worldview from Fox news? That seems incomprehensible to me. The groundswell of public demonstrations that started this week in DC may be the only effective effort so far to influence the groupthink that is going on in the US.
But the propaganda is working on public demonstrations as well…the current MAGA thinking all over twitter is that people are being paid to be bused in and demonstrate.
What I saw, in my part of the country, could be twisted to fit that narrative–but only if being “paid” means that the protesters are receiving Social Security payments. Median age appeared to be about 65.
Only 12% of the population of the US are between the ages of 60-69. This is the group most likely to be concerned over the recent fall in the stock market- but ONLY if they have investable assets (the minority).
Over 52% of the US population are between the age of 20-59. This group is likely more focused on egg prices and how much it costs to fill up a tank of gasoline. So for now, it is easier for this group to be indifferent to last week’s market decline.
H, I keep wondering what it would take for the requisite number of Republican congressmen to break ranks and do something to shore up the country. You would need 2/3 majorities of both the House and Senate to be able to take veto-proof action–and it wouldn’t be impeachment, I don’t think. What we’re seeing is a small trickle of dissent on tariffs from a few Republican senators, but not much more. One wonders if there is talk behind the scenes, negotiations to get a critical mass ready to take action if a certain line is crossed or a milestone reached. The sequence of events might have to be 1) Replace the house majority leader 2) vote to install a personal security detail for every congress member and his or her family 3) repeal the tariffs (or whatever other measures are egregious enough to precipitate this chain of event). None of this seems likely in the short term. The average Trump supporter does not own stock, and feels empowered by Trump’s willingness to burn down the system. I saw one interview in which a Trump supporter in Indiana told the reporter that there used to be two steel mills in town, and was hopeful that the steel mills would come back if Trump stays the course. When I read these “everyman” news pieces I always wonder how many people the reporter had to interview to find one who would say what the reporter wanted him to say, for the sake of the story. But I don’t doubt that Trump’s working-class supporters truly expect a manufacturing renaissance. I don’t expect Trump to walk back the tariffs. He might take other compensatory actions—like trying to restrict stock sales, or engineering private placements of stock, takeover of struggling companies, or other fascist interventions in the economy.
“Who wants to be lied to? What service are you providing to clients — who entrust you with billions of dollars — when you lie? That’s the question facing Wall Street strategists and the people who dictate what they can and can’t say, this week: Are you gonna lie to your clients or aren’t you? Are you going to enable this dangerous USTR farce which threatens your own livelihood, or aren’t you?”
I’m embarrassed to say I was a stockbroker once in the past. Brokers work on commission. They make money when you sell and when you buy. The more you buy and the more you sell, the better the brokers like it. It don’t matter which way you go.
Sanity lives here. The king’s new clothes that so many people adore, are invisible here. I like it here.
Less trade means less need for USD and Treasuries to hold USD. Declaring economic war on the whole world means less CB holdings of Treasuries, less USD as reserve currency. Trump tariff actions could mean he actually believes in the Mar-A-Lago Accord thing. All increases risk of some financial crisis. Not sure how non-linear or anticipatory the market dynamic is.
Our hourly liar in chief is once again leading by example. Brokers are invited to the party to both bend the knee and emulate in homage.
Bessent appears as an odd melding of Jeffrey Tambor’s depiction of Stalin’s deputy in “The Death of Stalin” and Aunt Bea from “The Andy Griffith Show.” This Administration is really channeling the formidable Francine Maisler — Musk, Vance, Miller, Navarro, Leavitt, Lutnick, Hassett, Waltz, Hegseth, Homan, Noem, Duffy, Big Balls, Paula White, RFK Jr, My Pillow, Rudy, etc etc.
Nevertheless, not sure even Hollywood could find purchase on the slimy Bessent as a stand alone character. But what if Bessent turns out to be Mnuchin in disguise? You may scoff, but show me a picture of them together since Bessent’s appointment.