Flat Stocks Feels Like A Win
A low volatility day that saw stocks end relatively flat, feels like a win. Treasuries and the dollar were well behaved with yields falling and the dollar gaining ground. We ended yesterday with the S&P at 5,396, the 10Y at 4.33% and the 2Y at 3.85%.
China May Not Fly Boeing
There were some tariff headlines with China reportedly stating they will not take on more Boeing made planes. Stateside the Administration intimated that they are negotiating with 15 countries on trade deals.
Silence > Noise
In the absence of meaningful news or data you don’t have to drown in noise.
The data will pick up today with retail sales and we get to hear from J-Pow (1:30pm ET).
You never know what might be said to cause a big uproar, but in the meantime we’ll talk about bigger picture ideas.
John Stuart Mill on Civilized Trade
Today I am going to remix a January 2024 post I made about “influencers” and try to spin it to the current discussion around trade. Back in 2024 I referenced John Stuart Mill’s essay “Civilization” which posited that a consequence of being civilized is that the power of the individual is surrendered to the masses. A ramification of which is that “a state of society where any voice, not pitched in an exaggerated key, is lost in the hubbub.”
When it comes to discussion around trade, tariff and policy it’s difficult for any individual to discern the voices that will improve and enlighten their thinking from those that have been corrupted or are simply amplifying public sentiment.
Setting aside the “media” or “influencer” discussion, the core of Mill’s essay is defining what it means to be “civilized”. A key criteria of being civilized is cooperation, it’s the ability to sacrifice some portion of individual will for a common purpose. Inability to cooperate is what defines savage populations. It is nearly impossible to find any enterprise that doesn’t require the cooperation of many individuals. Commercial enterprises, military enterprises, all require many hands to work as independent parts of a complex whole.
Trade As a Civilizing Force
What does this have to do with trade? I think the simple message is cooperation is good, without it we veer towards savage outcomes that are bad for commerce.
One of the right questions to ask might center on how best to create the conditions necessary for cooperation in trade, one that perpetuates a continued realization that these conditions can be beneficial to all. How to negotiate agreements that have the proper incentives to realize that a division of labor and comparative advantage can be mutually beneficial.
I don’t have the answers, but Mill’s world in 1836 is not terribly different from ours, the human condition remains intact.
XTOD’s:
XTOD: It’s easy to forget just how many 20% drawdowns we have had just in the past 5 years. We had the 28% decline in 2022, the 35% decline in 2020, and a 20% decline in 2018. In other words, every two years the market suffers a large drawdown, and it has come back every time (sometimes quickly and sometimes slowly).
XTOD: 60% of general admission ticket buyers at Coachella used Buy-Now-Pay-Later to finance their tickets, per Billboard.
XTOD: SCOTT BESSENT: “If we measure uncertainty by the $VIX, I don’t want to make market calls but it seems that the VIX has spiked and likely peaked.” Bull. Freaking. Ish.
I’m reading this as Bessent saying: “We’ll get tariff deals, we need some time, more progress is coming.”
XTOD: Think about this: When you avoid discomfort, you’re taking on a debt. You get the short-term benefit of the discomfort avoided, but the long-term burden of the repayment (with interest). Applies to hard conversations, procrastination, skipping workouts. Choose your debts wisely.
XTOD: Our greatest regrets are rarely failures to reach our goals. They're usually failures to uphold our values. Few people wish they'd been more ambitious. Many wish they'd been more courageous and generous. Success lies in building a career. Fulfillment lies in building character.
https://x.com/TimmerFidelity/status/1912204416133853570
https://x.com/unusual_whales/status/1911750492272939250
https://x.com/amitisinvesting/status/1911903429473276328
https://x.com/SahilBloom/status/1912139133499392146
https://x.com/AdamMGrant/status/1912177209378525369
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