This morning, let’s try to stay calm and keep things simple when explaining what’s going on.
In fact, I don’t even know if we can “explain” what’s happening, as we’re reaching levels of sheer absurdity.
Yes, we’re still obsessed with the issue of tariffs, and everyone has an opinion on the matter.
We’re trying to decode what’s happening with the information we’re given, but trying to decode what Trump has in mind has become a psychological and medical challenge of unprecedented proportions, considering how complex the man seems to be.
And in the middle of all this, the markets have gone mad.
Yesterday’s session will go down in history.
The Three Pillars in Ruins
When we talk about finance, financial markets, and the stock exchange, we often say that this world operates around three pillars.
You know these three pillars:
We’re talking about Macroeconomics – analyzing the broader economic environment –
Microeconomics – analyzing company fundamentals –
And the third pillar: Geopolitics.
When we operate with these three pillars simultaneously, and when the players in the financial world focus on them, making them the basis of their investment decisions, things usually go relatively well.
This global perspective often helps to balance out the excesses of one or another pillar that might be going through a rough patch.
Over the past few months, we’ve talked a lot, and I mean a lot, about macro:
Inflation, interest rates, economic growth (or the lack of it), and employment.
And even though this pillar has been a total mess since the end of the COVID crisis, we’ve still been able to function more or less normally –
Because people were also paying attention to individual stocks or sectors that were growing, like AI, for example.
As for geopolitics, it’s always been there:
Tensions between Taiwan and China, bombings in Gaza, the war in Ukraine, the U.S. elections, Biden wanting to talk to General de Gaulle, and General Macron tearing apart the French Parliament.
But the important thing is:
We had a global view.
A global reflection that helped keep volatility in check and gave the markets some ability to take a step back –
To see the bigger picture and look a little further ahead than the next four minutes.
And Then, Trump
Then Trump was elected, and it was clearly a win for the markets.
We doubled down on tech, because Trump wanted to develop AI with his Stargate Project –
Yes, remember!
At the very beginning of Trump 2.0, AI exploded because Trump was going to make it rain money on the sector.
Just like with cryptocurrencies – it was a SURE BET.
Well… almost sure.
Following the undisputed victory of the Republican President, the markets took off.
We hit “all-time highs” like it was nothing.
Trump was the Messiah.
Yes, okay, he was going to impose tariffs, but since EVERYONE knew that these tariffs would NEVER lead to higher inflation,
It was simply another way – a very good way – to Make America GREAT AGAIN, and that was to his credit.
But most of all, we were still able to focus on Nvidia’s quarterly results or the numbers from the Magnificent Seven,
While perfectly remembering the publication dates of the PCE, NFP, CPI, and ISM Manufacturing reports.
Not to mention that while we were managing our macro and micro agendas like pros,
We were still able to follow the electoral debates in Kazakhstan or the cabinet reshuffle in Colombia –
While in the other ear – the third ear – we listened to another (somewhat populist, let’s be honest) speech from Madame Meloni during the umpteenth G20 meeting.
And then Trump was sworn in at the end of January, and our brains did a “Control-Alt-Delete.”
Since then, we’ve been unable to do anything other than repeat the same words over and over again, like a broken record:
“Tariffs, Tariffs, Tariffs…”
At night, I wake up in a sweat because I dreamed Trump came to my house to personally collect tariffs.
I fall back asleep, and the next minute I’m back in a nightmare where I’m forced to buy a Nokia 3210 because buying an iPhone 17 now requires a mortgage loan –
And while I run from the Nokia Store, I’m being chased by a man dressed as an Obersturmbannführer trying to force me into a Tesla pick-up truck.
When I finally escape behind the wheel of a Diesel Clio fitted with Chinese hybrid tech that turns into a dragon after 30 kilometers,
I wake up drenched in sweat, only to realize it’s Wednesday morning,that we’ve been dragged around by Trump’s tariffs for almost a week now, and that since “Liberation Day,” we’ve had zero actual freedom.
100% Tariffs
Every morning, I replay the film of the previous day. I read around 50 finance-related articles about markets, stocks, and the economy Sometimes I also check out some kittens playing on TikTok, But I always come back to finance.
And this morning, I won’t lie – for a brief moment, I couldn’t even remember what day it was,nor when the market last moved in one direction for a full day –Or when we weren’t tempted to open our veins with a butter knife three times a day.
I don’t know if you realize, but when I looked at Wall Street’s close yesterday, It felt like I’d missed something ,because yesterday afternoon, U.S. markets had opened up 4.5%, and now, with my eyes still glued shut from sleep, I saw the S&P ended down 1.6%.
Even though Monday was exactly the opposite. After opening at rock bottom, the indexes climbed back to almost positive territory.
And yet no, you’re not dreaming.
What’s been happening over the last 48 hours is the plain truth. Markets are going in every possible direction, and yesterday, while Europe was catching up on the delay accumulated from Monday’s session in the U.S. (since most of the rebound had happened after European markets closed—nothing new there), the U.S. markets kept the momentum going until the end of the European session… only to crash again with brutal force. Just to hit us with a bearish reversal on U.S. indices we hadn’t seen since 1978.
The Nasdaq 100 had literally never experienced anything like it—because it was only born in 1985.
And me? In 1978, I was wandering around wearing an Argentina jersey pretending to be Passarella.
Anyway, we hadn’t seen anything like that on the markets since 1978.
To keep it very simple—because at this point we’re basically equipped with just one brain cell, and it only responds to a single stimulus: tariffs—there’s no need to overthink things.
Markets can now be summed up by two fairly simple equations:
First hypothesis:
Good news on tariffs, prospects of negotiation or a moratorium = 5% rise
Second hypothesis:
Bad news on tariffs, no negotiation, no moratorium, or worse, a NEW INCREASE in tariffs on any country not named Saint Pierre and Miquelon = 5% drop
Once you understand that, you understand what’s happening in the markets.
Now, I’m not saying it’ll be like this for the next 30 years.
I’m just saying that right now, you can talk all you want about fundamentals, macro, micro, inflation, or GDP—nobody cares, as much as they care about their first Hermès tie or their first bottle of Dom Pérignon.
The only thing that matters—what can make or break the market—is “what’s happening with tariffs.”
And even then… even if you focus just on that, you’ll realize the same piece of news, worded slightly differently, three hours apart, can TOTALLY change the market’s direction.
China and Trump: A Love Story
Let me explain. Because if we’ve come this far—and we could’ve just summed up yesterday’s session as “this market is completely stupid, I’m off for a long weekend”—we might as well go all the way.
So, yesterday morning I wake up (and no, I don’t shake you), I read the financial press, and we learn that Trump has ditched the idea of a 90-day moratorium. It’s not happening. And he’s pissed off at the Chinese, hitting them with potential tariffs of 104%. I’m not making this up—I wrote it in yesterday’s column. I quote:
“We’re told that Trump is mad (again) at the Chinese and will slap them with yet another surcharge. A surcharge that could push tariffs against China to 104%, and that he WILL NOT DISCUSS anything with Xi Jinping’s guys until they remove the retaliatory tariffs imposed last week on the U.S.”
That’s impressive—it’s the first time I’m quoting myself. I fear for my ego.
Anyway—so early yesterday, we’re told Trump’s going to “go after the Chinese with 104% tariffs,” and the market rallies because apparently we were happy to see that “there’s still room for negotiation.” Just goes to show—when we want to see the glass half full, we’re really good at it.
Long story short: the day goes smoothly, European markets surge to mirror the U.S. rally from Monday night, and we’re feeling optimistic, saying things like:
“Yeah, yeah, they’ll probably come up with a timeline and find solutions.”
Then Europe closes, and the Americans re-read Trump’s statement, in which he doubles down:
“Yes, yes, the 104% tariffs against China WILL go into effect at 12:01 AM New York time Wednesday morning.”
Meaning everything shipped from China to the U.S. is now taxed at 104%, and this has been in effect since 6:00 AM today.
That new BYD you brought to the U.S. to play E-Fast and Furious in the streets of L.A.? It now costs double.
Yes, I said E-Fast and Furious, because they’re electric cars and… never mind, that was supposed to be a joke.
But anyway—once the tariffs were confirmed and enforced, the U.S. market got absolutely destroyed.
Basically Monday’s rally, but in reverse.
And this morning, we are technically in a Bear Market on the S&P 500 (the Nasdaq is already deep in).
We’re in Bear Market if we include futures, which are currently down 1.3%.
But here’s the key takeaway:
If you thought Monday morning’s opening levels were awful, well—we’re back to square one.
The rebound from Monday to yesterday? Already tossed in the trash.
Back to the same old questions:
“Tariffs, tariffs, tariffs…”
I’m telling you—right now, that’s the only stimulus driving anything.
No News is Bad News
As for everything else happening in the world?
Almost nothing to report.
Well, other than Apple now planning to sell iPhones for $5,000—assembled in the U.S., with wooden casings and recycled Idaho potato skins for screens—and the stock is getting hammered 5% per day.
Microsoft has once again become the world’s largest company by market cap.
Apparently, Steve Jobs might resurrect himself because he’s that furious.
Also, Musk is stirring things up in Team Trump, having just called Commerce Secretary Peter Navarro a “moron.”
I’ll leave that one open to your preferred translation.
But hey, when your team talks like that internally, it really strengthens the bonds.
Aside from that, the Nikkei is plunging 5%, China’s doing nothing except flipping Trump the bird, and Hong Kong is down 1.55%.
Oil is at $57.14 with a target of $51.
Gold is at $3,029.
Bitcoin is back at $76,000 and the whole world saw the DEATH CROSS on the chart.
So yeah, if you’re wondering, no big economic reports today—except for the FOMC Minutes.
No earnings worth talking about either.
So we’re stuck on today’s one and only concept:
“Tariffs, Tariffs, Tariffs…”
Depending on THE LATEST NEWS ON THE SUBJECT, which may drop on Truth Social or X at any time, market direction will shift at the speed of galloping light.
But beware—again—the exact same news, depending on how it’s presented and when, can lead to completely different market reactions.
Because yes, these are professional markets—no jokes here. Have a great day and see you tomorrow for more adventures in:“Tariffs, Tariffs, Tariffs…” See you tomorrow!
