Liberation Day is here. At 3pm, the tariff truth drops—assuming we get one. Until then, the market is in a holding pattern.
Markets are not focused on much else and the odds we get full clarity on tariffs today seem slim to none. In the background the consumer seems to be holding up relatively well. Despite all of the headlines of government related layoffs, there has been little in the way of data indicating that it is having an impact on the overall economic picture - at least not to date. Just look at yesterday’s JOLTS data, the quits rate, hiring rate and layoff rate were unchanged. However over in manufacturing land the ISM data showed a worsening employment picture, muddied by tariffs.
Sit Down, Be Humble
While we wait, a reminder: this blog exists to cut through the noise, question consensus, and keep you thinking beyond the headlines. If you find it valuable, share it.
[Be Humble] About Tariffs
If you need a refresher on the “t” word, I’ve written my share - still far less than others - go back to my UFC Fight & Thucydides Trap analogy from a month ago for a primer. Or you can go back two months and ponder who actually bears the tariff tax and how exchange rates might respond.
What Act Are We In Again?
The point is that we’ve all read a lot about tariffs and I don’t know that we’re really any smarter for it. Nonetheless, perhaps ‘Liberation Day’ marks the beginning of the beginning of the end, or to quote Winston Churchill, “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”
If it’s the end of the beginning, what Act of this drama are we in? This is a transformation, not a conclusion. The real impact of tariffs—beyond today’s noise—will play out over time.
The long-term consequences, further negotiations, and potential shifts in policy will determine the true "end" of this tariff narrative, which is still far from being written.
What Are You Doing For Today’s Holiday?
I don’t know about you, but I’m having pancakes with maple syrup and canadian bacon for breakfast, moving onto burritos and margaritas with tariffed tequila for lunch and finishing out the tariff press conference with a bottle of tariffed champagne.
I might as well live large now before my 401K turns into a 201K. We head into the Liberation Day announcements with the S&P 500 Index at 5,633 and the ‘growth terrified’ 2Y and 10Y treasuries at 3.88% and 4.16% respectively.
The yield curve is still inverted between the 3-month and 10-year—something we covered in February. Back then, it shared the headlines with Mary Kate Cornet. She’s back, suing ESPN. And the recession signal? Still flashing.
Anyway, it’s all about the tariffs for now.
XTODs
XTOD: Torpedo bats? Back in my day, players did anabolic steroids, like men.
XTOD: The U.S. stock market typically declines by: 10% every other year
30% every 4-5 years 50%+ once a generation Invest accordingly.
XTOD: "Smartphone theory of everything" explains many trends:
• worsening mental health, esp women
• rise of addictive gambling behavior, esp men
• cognitive decline
• lower coupling rates, so lower fertility
• new information bubbles and global rise in populism
XTOD: There will never have been a transformation of a Country like the transformation that is happening, for all to see, in the United States of America. Companies are pouring into our Country at levels never seen before, with Jobs (and Money!) to follow. It is a beautiful thing to watch!
XTOD: A comment on my new essay, "Everything is Fast", that I think is worth sharing https://pbs.twimg.com/media/GnPZTeJXMAA8Kum?format=jpg&name=900x900
https://x.com/troptoberfest/status/1906790496766218675
https://x.com/dollarsanddata/status/1907047922136412582
https://x.com/arpitrage/status/1907075166535852224
https://x.com/realDonaldTrump/status/1906780813204836475
https://x.com/lukeburgis/status/1906106020759269409
So the tariffs will be hard to ease into. The problem is sonner or later the individual countries will band together and respond to trump. It's easier for trump to push around any individual country than the EU as total. Same thing as for the bricks. So use game theory but realize groups will end up responding. Trump can't go after the EU as a whole. We need to on shore as much as possible if it helps great.
ReplyDeleteThanks for the comment. I don't disagree with the idea that countries may band together to respond, something I raised back on March 13 https://edwardquince.blogspot.com/2025/03/daily-economic-update-march-13-2025.html
Deletedoes a unified front from U.S. trade partners make it harder for the administration to negotiate one-on-one? Probably. Interesting times.
The AI revolution is going to be just as important if not more. So you won't have any more Disney or fox or whatever you are going to be able to just ask hey AI can you please make me a movie like the Star wars but put me in as Luke Skywalker and change the ending so it fixes x y and z. Only fans is almost done porn will be the same but you will say hey make me a video in 3d where I am with a woman who looks like x person but is different in this way. Understand that this is 18 months away video games will be the same so if you never got a grand theft auto part 10 you will say yeah make me gta 10 in Japan and make me yukaza. If not 18 months maybe 3 years tops but it will be disastrous to many jobs and companies the deep state won't like it but they are already working on AI capture
ReplyDelete