____________________________________________________________________________________
It’s not just tariffs. Weak earnings are expected for many major companies in one of the ugliest markets we’ve ever seen. Discover how to target serious profits from that ugliness – with today’s live broadcast at 1:30 PM EST. Claim your RSVP Right here.
____________________________________________________________________________________
Thursday, April 3rd
“For the merchant, even honesty is a financial speculation.”
-Charles Baudelaire
____________________________________________________________________________________
____________________________________________________________________________________
Markets Today
🌏 Asia-Pacific: Down
🇪🇺 Europe: Down
🇺🇸 United States: Down
🛢️ Oil: Down
⚡Crypto: Down
💲10Y T-Note: Down
____________________________________________________________________________________
Major Market Events
- Everything is red
- Not kidding, this is a RED day
- Red, Red, Red, Red
🤔 My Thoughts
President Trump said he wanted his tariff announcement day to be remembered forever – and he got his wish as futures and global markets plunged almost instantly, and everyone even vaguely employed in finance – including us – started working through the night and preparing for a bloodbath.
Now there are lots of positives as well – including the fact that the 10 year treasury yield is dropping – which will mean cheaper mortgages and auto loans for a lot of Americans that frankly care about that much more than the stock market.
But we can’t ignore all the red flashing on the screen. The obvious take is that 54% tariffs on China will break every major business model from Apple to Walmart to Amazon.
And even if the US can get quick concessions and negotiate these rates down, things will look very ugly in the short term.
That take might be obvious… but it sure looks right to us.
But here are some less obvious takes that people might be overlooking:
The free trade globalists pushed too hard and a hardcore reaction was inevitable. President Trump is a master of political instincts, but he didn’t create this energy, he merely harvested it. Protectionism is largely the historical norm, and the post NAFTA era was always unsustainable.
This is a way to force external concessions from other nations – but also internal concessions from a hostile Congress (yes the Republican Congress is still largely hostile to President Trump’s agenda) and an elite class that desperately wants an economic status quo. Trump manually wrecked the global economy and that means he can manually save it – IF he gets what he wants.
Tariffs do nothing to solve the issue of capital leaving the US at the investment level. With foreign ownership of US equities, it doesn’t matter where stuff is manufactured because American wealth is heading overseas in the form of dividends regardless. They also don’t do much to address other ways that wealth leaves America – like through offshored jobs, and foreign remittances.
The most important thing now is massively increasing and cheapening domestic energy. That’s how President Trump can have his cake (lowering inflation) and eat it too (hardcore protectionism.) It’s by no means easy or guaranteed but this path he’s on demands a massive push for American oil, natural gas, and next generation nuclear.
China is in a tough spot. A poster on X called this China’s “Chernobyl moment” and that might be spot on. This will destroy China’s economy. So we think that the leadership wants to make a deal but also can’t afford to look weak in the face of American aggression. A key factor in all this is getting concessions from China while allowing them to save face. That’s a tough needle to thread and unfortunately there’s no obvious answer. Chinese military action against Taiwan is absolutely in the range of outcomes here.
So what can we do?
Lots actually.
IF you have a strategy that can do well in chaotic, bearish markets.
That’s exactly what I’ll be sharing later today:
____________________________________________________________________________________
Testimonial of the day:
Jack P. about the Calendar Club: “Made $673 on PYPL and $493 on RCL”
