Best Of

Morning all

Unlike the Grand Old Duke of York, President Trump marched his investors down to the bottom of the market and has now marched them back up again.

Apart from being a waste of time, money and effort as the markets will probably end up back where they started (no doubt some have made a right killing), has this been a demonstration of weakness or a display of power?

I suspect the answer is both and neither. Opponents and Supporters will no doubt argue ad nauseam the virtue of their side of the argument.

I’m not sure such periods of instability work to anyone’s benefit.

In any negotiation the real question is what does the counterparty think? MAGA can believe this was a display of power all they like. It doesn't matter to the counterparty (everyone who isn't America).

MAGA can think whatever it likes about the brilliance of their guy and their play. The counterparty thinks "these guys are crazy" and acts accordingly. What really winds Trump up is people laughing at him. Must be unfortunate to have so many counterparties doing precisely that.

Firstly, the crisis is not over, it s delayed. The world´s two largest trading powers are locked in an arm wrestle, and the Americans, by alienating their own allies, are in the weaker position. The stated policy goals of the Trump are unachievable, but even if they were, they are not desirable.

The core fundamentals of the American market have been damaged: stability, the rule of law, lack of corruption, executability of all contracts, even Dollar liquidity- all of these have been called into question over the past week. Then US soft power- the brands, innovation leadership- has also been weakened to the point that consumers around the world are boycotting American products. The rest of the planet now increasingly views the United States as a hostile power, not a leader of the "free world".

All of this has implications that last way beyond the result of one trading session, all of them imply a lower valuation for US assets across the board. The US has endured systemic threats before of course, but not at a time when the financial fundamentals were so weak, nor when there are so many credible alternatives to US financial and economic hegemony.

The most obvious problem in the short/medium term is that the market turmoil triggered a flight from the Dollar. The implications of that for the USD is that it is no longer considered an automatic safe haven. If Trump had not paused his policy yesterday, then the Treasury market would have faced a meltdown and the Dollar would have collapsed. As it is, I believe the "exorbitant privilege" is unsustainable, and increasingly contracts may be settled in EUR (or, to a limited extent in CNY, unless the Chinese move to convertibility).

This week of chaos has dramatically damaged the reputation of the Americans and, although there may be a pause, the reality is that a significant discount now needs to be priced in. That discount may now come in a somewhat more orderly fashion, than in a market crash, but asset allocation to the US will need to take account of the higher risks.

I pointed out the significant headwinds on several US tech valuations a few weeks ago, but the prices are still firmly a Sell. That seems true of the whole US industrial equity market, especially while the tariff position remains unclear. The US bond market should be in principle a hold/weak buy, but the Fed now faces huge problems with potential USD instability, so I would be reluctant to predict anything more than a weak rally there. Trump´s threats to the Fed have been damaged systemic confidence too and so scope for rate cuts is pretty limited.

In a way the US hit the iceberg this week. The fundamental damage is done, but the ship is settling rather than capsizing. Nevertheless at whatever speed, an increasing discount is now going to happen. The only question is the speed and the timing. More to the point, with Trump and his moronic cronies still on the bridge, the US could try to ram the iceberg for a second time.

It's not clear that the tariffs *have* been paused, by the way. Trump's word is not (yet) law and there's no published Executive Order amending the previous rates yet.

You'd assume that there probably will be, at some time today - presumably it was all so on-the-fly yesterday they didn't have time to draft it with sufficient rigour - but I wouldn't like to be an importer taking delivery of something at a dock right now. Indeed, I'd be inclined not to if legally the import duty is, say, 30%+ right now but will probably be 10% in a few hours.

But really, how is anyone supposed to be doing trade amid the constant yo-yo-ing of tariffs? Maybe that's part of the plan, although pretty daft if so. But then Trump is daft on this. Businesses need stability and assurance to have the confidence to invest and spend. There can be none in the US right now.

My contrarian opinion is that the cuts won't be politically damaging at all, to Labour, in the long run.

The usual attack by conservative parties against centre-left parties is that the centre-left wastes money on tax-and-spend policies.

The Democrats lost the election partly because of these types of attacks. The spending on CHIPS Act, Build Back Better, Ukraine assistance etc was used to portray the Democrats as being excessively wasteful & spendthrift. The Democrats added to the potency of these attacks by constantly touting the billions of dollars they were spending on these initiatives.

If a centre-left party demonstrates that it is aggressively cutting spending, then it is actually building valuable political capital to neutralise these types of attacks.

Labour might become unpopular now because of the cuts, but this can be very helpful in the future to build the perception that they are responsible stewards of public finances.

The Dems weren't helped by the coastal liberal lawyer Harris not bothering to visit those new factories the investment had funded.

As others have pointed out, the Democrats *did* do that. I have picked up from comments people post on Twitter and on my own YouTube channel that there is a clear and definable group of Americans living in America who are ignorant of what is happening in America because of the news they consume.

When people say with genuine sincerity that they weren't aware that Musk was going to be in the American government. That Musk & Trump and Vance were making claims against neighbouring NATO countries. That Trump was going to impose tariffs. And I point out that we all knew from over here because its all over the media.

American "news" is now so biased that for the faithful all they receive is propaganda. Living inside a MAGA bubble where what they are told is heavily controlled and selected. All news by definition is selective - and America's "free press" hasn't been for a long time - but this is off the scale.

Start off with low information voters. The majority of voters here as well as there don't have the time or the interest to understand the details of how things work or what is going on. Carefully curate the news fed to them to *keep them in the dark*. Tell them that black is white and do so endlessly until it is accepted. And then you can do anything - as we are witnessing.

A $304bn raid on American taxpayers by the Trump elite. And seemingly most Americans not only don't know about it, but have been told to support it because MURICA.

Trump is stuffed. Even the Telegraph are criticising him:

How fears of market Armageddon forced Trump into a Truss climbdown

https://www.telegraph.co.uk/business/2025/04/09/fears-market-armageddon-forced-trump-truss-climbdown/?ICID=continue_without_subscribing_reg_first

Heck, even the New York Post is less than glowing:

https://nypost.com/2025/04/09/us-news/how-nyc-ports-are-coping-with-trumps-tariffs/

The world seems to have split into two camps:
Those who know Trump caved
Those who think Trump is infallable

I posted yesterday that there was no way out for Trump. Even if he climbed down and reinstated status quo ante on tariffs, the world won't say "fair enough" and go back to business as usual. Trump is Fucking Mental. You can't do business with America, can't trust anything America says, certainly can't trust America with your money.

All the 90 pause shows the world is that the clown isn't fully in charge of the circus. Which makes forward planning even more impossible unless you plan for the obvious strategy - avoid the circus.

Scary as Trump is, what is far more troubling is the clique of fluffers around him, spinning his brilliance to all who will listen (the main-stream media). There is no acknowledgment that this was a Grade A Fuck Up by Trump. To the obsequious onanisists, this was always the plan.

Yeah, right. How has destroying trust, actively causing long-time friends to go elsewhere, terrifying the bond markets and making the US a far less attractive place to do business ever part of any coherent plan to return America to some form of mythical greatness (back when the genie of racial, sexual and religious equality was firmly stuck in the bottle).

From this:

The government will no longer defend a decision, made by the previous government, to allow a controversial new coalmine in Cumbria.

The new Secretary of State for Housing, Communities and Local Government, Angela Rayner, has accepted there was an “error of law” in the decision to grant planning permission for the mine in December 2022.

Consequently, the government will not now be defending two legal challenges next week against the mine – by Friends of the Earth and South Lakes Action on Climate Change (SLACC).

It has instead informed the court that the decision to grant planning permission should be quashed.

West Cumbria Mining wants to build the UK’s first deep coal mine in over 30 years. It would produce metallurgical coal, also called coking coal, for use by the steel industry.

https://www.bbc.co.uk/news/articles/c99w1qjp8qko

to this:

The government has offered to buy the coking coal that is essential to keep steel production going at British Steel in Scunthorpe, the BBC has been told.

British Steel has been warning for several days that the raw materials needed to keep its plant's two blast furnaces operational are running out.

Sources said the government was putting the offer in writing to British Steel's Chinese owner Jingye, which will decide on whether to accept it.

https://www.bbc.co.uk/news/articles/cp311nr7w34o#comments

Who needs private investment in a British coal mine when the government is willing to buy foreign coal.