Trump, Tariffs, And Trade Make Wall Street Tense
Investors Are Hesitant Because They Do No Know What Comes Next
We have one surefire way to predict what Wall Street will do next: Just listen to what Donald Trump says. If he flexes on trade or tariffs, Wall Street will get skittish and sell.
Trump’s residual flexing from the weekend certainly had Wall Street nervous this morning.
Trump's flexing today only spooked them further, with the Dow falling 1% on the day.
With equities down, Treasury yields naturally moved up.
Ironically, the dollar had a relatively good day in forex markets.
Part of Wall Street’s nervousness is simply disorientation—investors are still grappling with how President Trump is reshaping the maritime trading order with his tariff and trade talk strategy—a strategy which tends to produce rather messy although (hopefully) beneficial results.
So far, Trump has gained only a framework agreement with the UK, the outline of a deal with Vietnam and a fragile truce with China from the pause, a far cry from the “90 deals in 90 days” his administration promised.
Trump has consequently opted to unilaterally dictate the tariff rates, although his Treasury Secretary, Scott Bessent, said at the weekend that some countries might be given a three-week extension to negotiate.
“There’s a lot of congestion in the home stretch,” Bessent said on Fox News Sunday.
“So, by telling our trading partners that they could boomerang back to the April 2 date (and the reciprocal tariff rates), I think it’s really going to move things along the next couple of days and weeks,” he said.
Still, despite the bad day on the trading floor, equities are still up on the year.
That suggests Wall Street’s longer-term view of President Trump is that his policy bets are likely to be good ones.
What it absolutely does mean is that Wall Street has no real sense of where the tariffs and trade talks are going to end up at. Investors do not know if Trump’s policies are going to fail. Investors do not know if Trump’s policies are going to succeed. On the longer horizon investors like where President Trump wants to see this country head, economically speaking, but they really don’t know if he’s actually leading the country in that direction. When it comes to President Trump and Agenda 47, they are just guessing, the same as everyone else.
That is an important point to remember when juggling all the anti-Trump and pro-Trump propaganda out there. Other than where prices and markets are today, no one knows where this economy is headed or what will happen along the way. Knowing what happens when certain trends are extrapolated into the future is not the same as proving that those trends will actually continue into the future. Trends do reverse, and quite often.
There are no experts, and there are no investors with insights. Wall Street’s constant skittishness about all things Trump pretty much proves that absolutely.
Wall Street has really become a casino bet in recent decades. Rudderless, it will behave chaotically next time a major, unpredictable event happens. A major earthquake in CA, a regime change in Iran, or any other sudden disruption could spark wild swings. Even the predictable problems, such as our commercial real estate quagmire, could cause Wall Street chaos. Long term, that financial Singularity looms. Bottom line: stuff your money in your mattress, kids.
The Dow is basically at the same point when Trump took office. It flip flops about as much as he does. Park your cash in precious metals or perhaps money markets. Definitely have it in hand and let the idiots play the game, as the market doesn't really reflect the economy like it did back in the 80s when PEs were down to Earth!!