“I’ve seen the needle and the damage done” – Neil Young
We are probably halfway done with our correction but we’re also LESS THAN halfway done with tariff implementations with 4 officially enacted tariffs in the past week and ANOTHER 4 scheduled to begin on April 2nd, including a 25% tariff on EVERYTHING from the EU, 25% (again) on Auto Imports, a little something-something on Agricultural Imports (President Trump isn’t much of a detail guy – vague threats are more in-line with his mob-style Presidency) and Reciprocal VAT Taxes on the Rest of the World.
Fortunately, most of what Trump says is nonsense he doesn’t follow through on but the question is – are you willing to make that bet? As you can see from the Bloomberg chart, any one of those tariffs can be devastating to both the US Economy and the economies of the tariffed countries and we’re not even considering the inevitable backlash of tariffs being placed back on the US which, as Trump has often explained, would strongly encourage manufacturing to move out of the US and head overseas to avoid the tariffs.
As we noted last Friday, Trump’s Distributive Bargaining approach to International Trade is like using a screwdriver to pound nails into a board – even if it does work a bit, it’s clearly ineffective and a massive waste of time because you are simply using the WRONG TOOL FOR THE JOB!
The main problem with Trump’s whole plan is that the US, while a MASSIVE 25% of the Global Economy is still ONLY 25% of the Global Economy and, if you choose to go to (trade) war with EVERYONE, then it’s 75% to 25% and you are going to LOSE! This is not very complex logic:
The strength the US has had in the past was our NATO alliance with Europe, which also led to alignments regarding trade and in UN votes, etc. That is also being shredded and like Russia, the US is becoming a Global pariah – against which the other counties will rally against to insure their own safety and security. It’s the fall from Global Leadership to Global Outcast that should worry Americans most but most Americans couldn’t point to Brussels on a map – so… Trump.
In November there will be tariffs on Timber and Copper – the cornerstones of our Building Industry and then “More Stuff” in December – just in case our Economy survives the year and needs a final stake through its heart.
8:30 Update: Like CPI, the PPI came in much lower than last month at 0% in the headline and MINUS 0.1% in the core and that’s very nice with 0.3% expected on both BUT aside from being subject to the same one-off issues as CPI was yesterday (which was another disappointing day for the markets), the January figures were revised UP to 0.6% on the Headline and 0.5% on the Core, BOTH up 0.2% leading to Feb being 0.2% lower than the revised Jan but the average IS STILL 0.3% and the MSM Cheerleaders who aren’t mentioning it F’ING WELL KNOW IT AND ARE SIMPLY ATTEMPTING TO MANIPULATE THE DATA!!!
PPI is going up – it’s been going up since 2023 and there’s no single data-point that going to change that and tariffs will certainly make it worse – THAT IS MATH!!! I feel like Winston Smith in 1984, reading the Government Data that I know is being manipulated but the proof is being erased and then I start to wonder if it was ever any other way…
As with the tariffs, what’s really scary to Investors is the bullshit – if you can’t rely on policy or data or the laws of the land – how can you invest? We are everything they used to say was wrong with China at this point.
Meanwhile, what’s left of our Government is shutting down tomorrow unless the Republicans can find 8 Democrats to roll over and accept the bill they were not consulted on AT ALL. It’s not like the GOP didn’t know they needed the votes – well, we ASSUME they understand the rules of the Senate, right? So, KNOWING they needed 8 Democrats to pass the bill, a strategically savvy GOP might have included 1 or 2 Democrats in the process of drafting the legislation, right? Especially when the whole thing was being put together less than 48 hours before the deadline we knew about since November, right?
I don’t know, these things seem pretty straightforward to me and people used to pay me to consult on these things in DC but that was over 20 years ago, when Donald Trump was a game-show host…
I’ve been watching The Apprentice on Amazon, which is a nice bump from Bezos to the $460M Trump already made from that show (thanks Jeff!). Fortunately, with the $40M Bezos is giving Melania for her book rights we won’t have to worry about Billionaire’s buying the President’s influence because….. Sorry, laughing too hard..
Anyway, it’s interesting to see Trump explain his business logic in the show as it gives you a little insight into why he does such ridiculous things as President. Oops, spoke too soon – this just in: “Trump Threatens 200% Tariffs on European Alcohol.” Better stock up on Guinness and Jameson!
Thanks to (and the reason for) tariffs being pushed back to April (Q2), the Atlanta Fed’s GDP Now forecast for Q1 is now MINUS 2.4% – a big improvement from MINUS 2.8% but doesn’t that mean we’re punting that -0.4% PER MONTH into Q2? Knowing how to do math is such a burden – you can see why it’s discouraged in our schools these days…
Remember, 2 negative quarters in a row is the definition of a Recession and we are only 25% of the Global GDP now so -2.4% will take us down to 24.4% but then, if the rest of the world trades our lost Trillion Dollars worth of goods among themselves, then Global Trade will rise for them while it shrinks for us and we can slip to 23%. But that’s just one quarter – if we keep it up for a year and enact more tariffs that force our former allies to trade elsewhere – we could easily slip below 20% while Europe and China expand and strengthen their bonds.
Let’s watch our Bounce Levels – they are 100% red so far and, if we go into the weekend that way, you’ll find out why I said “Beware the ides of March!” at the beginning of the month:
Be careful out there…
… Our breakup song with the World…
