Time capsule moment: people posted Ghibli AI selfies on social media, everyone loathed it. But I needed a picture with medicine in the color of stonks going down.

A quick follow-up to yesterday's finpost: things didn't go quite as expected but the White House is continuing to administer 'medicine' to Wall Street. Surprised no one's said "I'm not against the medicine, I'm against the mandate".


Before New York woke up, bears had already run amok at other exchanges.

Yesterday I reposted Bill Ackman's simpish request for a three-month pause of the tariffpocalpyse. That tweet seems to have started a game of telephone:

CoolWerewolf

What just happened? At 10:10 AM ET, rumors emerged that the White House was considering a "90-day tariff pause." At 10:15 AM ET, CNBC reported that Trump is considering a 90-day pause on tariffs for ALL countries except for China. By 10:18 AM ET, the S&P 500 had added over +$3 TRILLION in market cap from its low. At 10:25 AM ET, reports emerged that the White House was "unaware" of Trump considering a 90-day pause. At 10:26 AM ET, CNBC reports that the 90-day tariff pause headlines were incorrect. At 10:34 AM ET, the White House officially called the tariff pause headlines "fake news." By 10:40 AM ET, the S&P 500 erased -$2.5 TRILLION of market cap from its high, 22 minutes prior. Never in history have we seen something like this.

Indexes ended the day close to flat (well, DJIA was down almost 1% but nobody cares about the Dow).


The WSB daily thread had more than 40k comments; that is, many were gathered around the water cooler to shitpost about their losses.

adwise27

I think I am going to post "no fucking way" every 45 minutes today just to cause a little extra stress for everyone

Theinsulated

SPY down 1% - Joe is destroying America. SPY down 15% - We need to trust Trump's instincts.

zlordbeats

NOBODY CARES WHAT JA RULE THINKS IN A TIME LIKE THIS

Apparently Vietnam's offer of free trade was rejected by the White House as not being good enough. There seems to be no certainty on what the administration actually wants from its trade partners. Perhaps it's all being done behind closed doors (or the Tariff PC Small Group). But with x economic advisors * y countries, you'd expect something to have leaked by now.

New Republic

Miran argued that other countries ought to comply with Trump's demands for more money because of the "global public goods" that the U.S. provides, including global security and the dollar and other reserve assets, "which make possible the global trading and financial system which has supported the greatest era of prosperity mankind has ever known."

Somehow pax americana has been twisted into mobsters demanding protection money.

China seems to have drawn more ire from the president than even Canada.

China's economy is big and complex and I won't pretend to understand it beyond the basics like manufacturing, technology, and currency. Another elementary-level observation: depending on who you ask, China is either in a bubble or - as a huge country with vast resources and centralized power - impossible to harm economically.

Ever since the Evergrande thing, everyone knows that an outsized portion of China's GDP comes from domestic real estate that's often unoccupied or unbuilt. This reminds bubble theorists of the the subprime meltdown of '08 and so they think the collapse is imminent. Well, they've thought a collapse was imminent for the past three years. It would seem that global-scale manufacturing go a long way to ensuring financial stability. That is, as long as there's plenty of GDP to go around, Beijing can backfill failing sectors like everyone did during covid.

China is also the US president's arch nemesis. Probably. Who even knows. But let's pretend for a moment that he really wants to beat China or feels he needs to do so to accomplish a political objective. Escalatory tariffs with China's largest trading partner could be a calculated (or inadvertent) attack on the nonfailing pillar of China's economy. Perhaps the Mexico and Canada and EU noise is just a smokescreen for the main target. On the other hand, I can't think of why a global tariff war would be necessary - it seems like it'd be smarter to only battle on one front. It won't matter if both leaders decide to play hardball, the outcome would be the same.

I don't imagine the US or China have rosey long term economic prospects with a protracted 50-100% mutual tariff rate. So either the White House is hoping to bully an advantageous trade deal out of Beijing or they're poking at what it perceives to be a bubble and hoping to see a pop. We've seen markets, manufacturing, and supply chains recover from adversity (covid, war, Crowdstrike). But sometimes the damage cannot be undone - namely bankruptcies/liquidation. Perhaps the plan is to push large portions of the Chinese economy past the brink such that only foreign investment can bail it out.

I doubt it will work, but maybe that's the plan.

The floodgates are open, we can now reply to everything with this one annoying phrase.

Related / internal

Related / external