The huge spike, following the selloff, evokes further parallels with the Dotcom Bust and Financial Crisis crash, in the middle of which similar spikes occurred.
By Wolf Richter for WOLF STREET.
Stock prices now reflect what the President says, rather than anything else. Even AI mania or its fizzling no longer matter. Trump’s words – and the chaos and uncertainty they engender – do. And a lot.
After he’d announced the “reciprocal tariffs” on April 2, markets spiraled down for four days. Today, at 1:18 PM Eastern Time, Trump announced on his social media site that he “substantially lowered” the reciprocal tariffs to 10% for a period of 90 days during which the White House would negotiate with its trading partners. And he said that tariffs on China would increase to 125%.
Upon the social media post, markets spiked by near-record percentages on record volume of about 30 billion shares.
The S&P 500 shot up by 9.5% to 5,457, its biggest percentage gain since October 2008 which was in the middle of the 50% Financial Crisis crash through March 2009. Today’s spike undid the last three days of the four-day rout since April 2. The index is now 3.7% below the April 2 close of 5,670 and down 11% from its high in February.
The Nasdaq Composite spiked by 12.2% to 17,125, its biggest one-day jump since January 2001, in the middle of the Dotcom Bust (March 2000 through September 2002), when the Nasdaq Composite would ultimately plunge by 78%. The index is now down 15% from its December 2024 high.
This spike occurred after Trump wrote on his social media platform, Truth Social, concerning China:
“Based on the lack of respect that China has shown to the World’s Markets, I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately. At some point, hopefully in the near future, China will realize that the days of ripping off the U.S.A., and other Countries, is no longer sustainable or acceptable.”
And concerning the rest of the world:
“Conversely, and based on the fact that more than 75 Countries have called Representatives of the United States, including the Departments of Commerce, Treasury, and the USTR, to negotiate a solution to the subjects being discussed relative to Trade, Trade Barriers, Tariffs, Currency Manipulation, and Non Monetary Tariffs, and that these Countries have not, at my strong suggestion, retaliated in any way, shape, or form against the United States, I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately. Thank you for your attention to this matter!”
The existing tariffs on imports from Canada and Mexico — 25% on goods not covered by the USMCA — remains unchanged, and would not be subject to the additional 10% tariffs.
The pause and 10% tariffs during it would not apply to sector-specific tariffs, which would continue as announced before; but would apply only to the reciprocal tariffs, Bessent later clarified.
The reciprocal tariffs as announced on April 2 on imports from nearly 100 countries, including a 104% tariff on Chinese imports, became effective overnight. Today’s announcement replaced them with a 10% tariff for the next 90 days, and it replaced that 104% tariff on Chinese imports with a 125% tariff. But China is the elephant in the room:
The issue is not only tariffs but regulations and administrative barriers that keep US products out of other countries. The EU and Japan use them extensively, and they will be up for negotiations over the next 90 days.
The White House will not release a list of the 75 countries that have offered to negotiate the reciprocal tariffs, it told NBC News.
Trump, accompanied by auto racing champions, told reporters at the White House that he’d paused the reciprocal tariffs because:
“I thought that people were jumping a little bit out of line,” he said. “They were getting yippy, you know, they were getting a little bit yippy, a little bit afraid, unlike these champions, because we have a big job to do.”
“No other president would have done what I did.… And it had to be done,” he told reporters. “You have to have flexibility,” he said.
So now we’re down to stock markets spiking or plunging in a huge manner based on what the President says. It’s no longer earnings or revenue growth or AI mania or whatever. But presidential announcements. This is what happens when edgy traders and algos and people thinking all this is a video game react, after the gigantic run-ups of stock prices in recent years to these precariously lofty levels.
But the huge spike, following the selloff, also evoked further parallels with the Dotcom Bust and the crash of the Financial Crisis, during the middle of which these types of spikes had occurred.
Slightly smaller spikes also occurred during the March 2020 crash, but by that time the Fed had already unleashed mega-QE and 0% interest rates. Now the Fed is sitting on 4.25-4.5% policy rates to wait and see, while continuing with $20 billion a month in QT, which has already shaved off $2.24 trillion from its balance sheet.
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Tariffs appear to be somewhere between 10 and 125% now. Hard to keep track.
What about the 25% on imported autos? Is that still on or is that 10% or is this just the reciprocal that got delayed?
read the article.
Ok, yes I read it more carefully. This is just the reciprocal tariffs from last week.
This does remind me of 2008, 2020, a few other times. It’s not stable and I don’t think the coast is clear. I pay attention to interest rates and the movement in the 10 year the last few days has been mind boggling.
‘Trump’s words – and the chaos and uncertainty they engender’
Is chaos desirable?
No, but that’s how he does it. We went through this in 2018. Lots of articles here about the chaos. I wrote to the White House about it in 2018 and then published an article here about it.
https://wolfstreet.com/2018/09/23/what-i-told-the-white-house-about-trade/
I spent way too long trying to find the actual news today – should have just waited for wolf. Thanks.
This
Thank God, everything is fixed now. All that “he” needs to do is get mortgage rates back to 2.75% and we are all set. s/
Why own stock? For insiders to manipulate and inside trade of course.. To know that when you speak you can greatly change the direction of this market, imagine how much your friends or yourself can make by placing bets the day or two before… Not even as a casino owner you are allow to manipulate table games to that degree of predictability.
I am sure none of this is going on and DJT spike 20% in one day is totally normal.. On the bright side, at least Newsmax was down today but just barely..
As an old retiree trying to live off my portfolio and SS, I find this market volatility alarming. This is crazy and I have no idea when (or if) the financial nonsense will end., or what the end will look like.
Hopefully the risk profile in your profile reflects your need for consistent income.
*portfolio
In the end, risk diversification is all you’ve got.
Before 50 years worth of degenerate politicians, their media minions, and worthless arrogant academics told everyone that perpetual, accelerating trade deficits were unimportant (“we have a technology called the printing press”), people could rely on Treasuries as a store of value, a fire-and-forget investment that provided safety in exchange for a 4-5% return.
20 years of ZIRP indicated that world was actively dying (although sold to the public as the Dawn of Utopia, a surfeit of savings, courtesy of China).
But the trigger for Trump’s partial retreat was apparently a fairly massive sell-off in Treasuries (so much for the magic, impregnable fortress of the Fed’s printing press).
That is an even *stronger* signal that 50 years of degenerate politicians may have terminally poisoned the US macroeconomy by dealing policy heroin).
So if you can’t rely on Treasuries to return par (in essence what the earlier panic was ultimately about) all anybody has is diversification.
A lot more work, and a lot more risk (compared to the old, forfeited world) but that is what a debauched fiscal Treasury means.
Treasuries become just one more risky asset in a world of risky assets.
It would be great if Wolf put his brain to a Treasury spike post mortem because, if certain facts are borne out, it wasn’t a Dawn of Utopia, it was the Dawn of a long courted American Hell.
“It would be great if Wolf put his brain to a Treasury spike post mortem…”
The 10-year yield went back to where is was a few weeks ago. It should have never dropped like it did, it should have risen instead of dropping, and now it undid part of that drop but it’s still way too low.
To be continued in 90 days.. By then I am sure we will see China at 200% tariff if not more, might as well just do trade embargo at that point..EU will probably be more as well. New announcement, market tank another pause revision, rinse and repeat…
Kevin O’Looney of Bark Tanks wants 400% tariffs on China!
Caution here. Think big picture. China received 300 billion in trade surplus last year, and spent on their military. They need the U.S. market. They will negotiate. Not sure what terms Trump is looking for,must listen closely!!
Hours before his tariff announcement he said ‘it is a good time to buy’ on truth social. Apparently a lot of call options were bought that were set to expire on the 9th. Hmmmm?
kinda like when the Fed speaks ; get a grip ;
First we had the Trump bump. Then we had the Liberation Day Trump dump.
And now, apparently, we have the Trump pump.
What’s next? I’m all out of rhymes!
Trump slump?
And then after that a Trump jump?
I still can’t believe I have not heard a cover of the Van Halen 1984 hit song “Jump” remixed as a “Trump” song (not a Trump fan but I can picture 100s of people in MAGA hats singing):
Might as well Trump (Trump!)
Go ahead and Trump
Get it and Trump (Trump!)
Go ahead and Trump
Manipulation gyration!
So…are we great again yet? I’m just feeling embarrassed.
That’s the only acceptable way to feel assuming you’re a US citizen. Okay, disappointed too.
” I’m just feeling embarrassed.”
I’ll go with shamed and scared. Against the backdrop of his attacking the press, law firms and free speech in general, more so. Against the backdrop of wholesale abandoning (not reasonably trimming) financial and other consumer protections, more so.
Meanwhile, we are back to a pseudo dot com gold rush, in a few seconds? For how many more seconds?
I rolled a lot of stocks into interest-bearing cash before “liberation day.” When yesterday’s “news” appeared, I ignored it. I refuse to live in moment to moment and everyday psychological Stockholm Syndrome in the shadow of such a damaged personality. I take breaks, breathing the real air of actual liberty.
I am confused. Isn’t that what you voted for? Why is everyone so surprised? It reminds me of Captain Renault in Casablanca, “I’m shocked — shocked — to find that gambling is going on in here!”
Lack of Trust [ in US Leadership ] will sustain Gold’s rise.
I didn’t know being great again would feels so sad!
Trump is not a man or a policy or a direction. He is a political and social phenomenon.
I happily voted for Trump with this being about what I expected while expecting nothing specific.
Everyone pays lip service to the idea that when something is unsustainable it will stop. Nobody really believes that nor do they really want an end of the unsustainable if it is delivering immediate comfort.
Trump as phenomenon means that other, non-human forces are the agency behind him. Perhaps that agency is simply “consequences”.
Change means first, demolition, what comes after is something else, but first comes the demolition. Up to this point it’s not even clear that the demolition has gone nearly far enough to accomplish anything permanent.
But Ronald Reagan achieved [ good results ] without any Demolition.
Did we already forget, or are we too young to have experienced it?
Reagan presided over the second dip of the horrible Double Dip recession that turned into an employment crisis with unemployment going over 10% in the second year of his term. I got out of grad school at the time, and I tell you, it was a shitshow. Huge inflation, huge unemployment, thousands of companies collapsing, thousands of banks collapsing…. Unemployment was still over 5% when he left office. There was a lot of “demolition” under Reagan. And it mangled many young boomer lives. Maybe the outcome ultimately overall long-term was pretty good, but to now say that there was no demolition contradicts everything I and millions of others lived through.
“Non-human forces”. Did your church tell you to think and repeat that? I guess they also told you “he has changed” and “pray for him”.
I remember.
“We” ALL lived through through a lot of REALLY HARD times back then. But the shining city on the hill built on the start of the big deficit spending pile was all worth it, don’t you agree?
50% tax cuts were great, too.
Oh, almost forgot. Wisdom dispensed daily.
Exactly.
Howdy Folks. China steals more than American jobs. About time a President told the rest of the world to ________ off.
Fine, but don’t cut off your nose to spite your face. Seems like some of his advisors have gotten him the message.
I feel certain some influential person(s) very urgently put to him the global instability of his “Rome is burning” moves. But these things only penetrate that mind for a few seconds. Then we are back to the races. China, sure, OK. He can make big claims on that topic.
Debt-Free-Bubba,
I’ve never understood this viewpoint. China never forced American companies to setup and manufacture overseas and exploit low cost labor. The people Americans elected into office allowed it. China is not evil, bad or anything negative. Their achievements in bringing nation out of poverty, providing health care, education and so on is amazing. It shows with stable policies you can achieve long term goals. Our government is busy trying to repeal on Obamacare again rather than considering healthcare a basic human right provided by society.
The CCP has political prisoners, the Uygurs, Falon Gong working in factories for no wages. They sell their organs on the open world market. They steal our technology. They have high tariffs on our goods imported into China. To make a product in China, you have to employ Chinese and give up your patients and technology.
Maybe the CCP is more your style.
The Uygur situation is the most inaccurately reported thing related to China, but that is the stance with any leftist governments. Read into it beyond the surface and you will discover the complexity.
In the end none of what I claimed in my initial post was wrong. They lead the way in technology now as you can see and no reason to think that won’t continue. We could easily have a friendly relationship with them if we made the choice
Glen,
Your understanding of the Uygur situation is bs and you have bought into CCP propaganda.
John said: “To make a product in China, you have to employ Chinese and give up your patients and technology.”
———————–
Then, perhaps don’t make a product in China?
@Glen,
The Uygur situation, and the brutal suppression of the Tibetan independence movement and falun gong are well documented. My inlaws fled the Maoist takeover in 1949 on the back of a bicycle, then by boat to Hong Kong, they literally lost everything, including a thousand years of family records when the Communists burned the village temple. Mao is personally responsible for the deaths of as many as 100 million people (see Great Leap Forward), and he destroyed the lives of 10s of millions and set back the scientific and educational growth of China by several decades during the Cultural Revolution. His successors murdered thousands in Tiananmen square in 89, and have suppressed the people of Hong Kong in their desire for independence. They have certainly belatedly allowed some economic freedom starting in the 90s, which is the sole reason for their economic progress, government policies have absolutely nothing to do with that, it’s what happens when people are allowed to have private property and their own businesses anywhere in the world. And their current leader is reversing the last few decades of progress on economic freedom and consolidating power like Mao did before him, because their form of government is fundamentally corrupt and power hungry. They surveil everything their citizens do and write and post, and lock people up for any dissent, and censor the Internet for any ideas that are potentially independent. This forum would have been shut down and it’s host imprisoned for instance because it criticizes government policy on occasion, so your commentary is pretty ironic.
And I wouldn’t characterize them as leftist so much as a kleptocracy or autocracy bordering on dictatorship. It doesn’t matter much what political philosophy people espouse once they start limiting freedom of speech and dissent, although it is true that every single Marxist revolution has led to a dictator in short order. Pretty clear those people don’t give a crap about much except their own power.
But I guess they run the trains on time, like the guy with the mustache in the 1930s….
The U.S. has more prisoners per cap than any other country in the world. Just sayin’
…and, for the blamegame record, NIXON went TO China, with a ‘Murican Exceptionalist view of opening big markets for U.S. goods and increasing the Sino-Soviet split, never envisioning that any people are free to pick and choose what they think will work for them from Capitalism’s smorgasbord and its rope-sellers, as well as that a nation that has always considered itself ‘celestial and chosen’ might generate its own version of what some of our nation terms: ‘MAGA’…
may we all find a better day.
Very well said…..as usual, dustoff.
Boy, they (and many others) sure did know how to spot all the more exceptional rope sellers in no time at all, eh?
Yeah, MAGA is sorta like the art of the exceptional rope deal…and just as short term….. (not many brain cells needed, a grade school bully who can add and lie fluently can master it)
Louie’s jail point is also very appropriate, too…and getting all set up for full blown vagrancy laws.
Throw in the people who explain what the the non-human forces want and it’s a package deal.
What? The Chinese people are constantly under surveillance by their communist government- social credit scores aligned to their compliance. Cameras watching their every move. You step out of line, you disappear.
Not to mention, slave labor. Most of the country still lives in utter poverty while the fat cats in Beijing, much like DC, see all the financial benefits of their labor.
But China isn’t that bad I guess.
D,
You haven’t noticed how the centralized US federal government just weaponized social media surveillance aggressively in several ways?
Have you heard of this fun little tool called Clearview?
Sure it’s better here in the US.. but for how long?
Pretty stupid take. China or any other country does not steal American jobs. Americans (often European origin whites) offshore the jobs.
Moreover, its not like we in USA dont get anything in return. The corporate folks get cheaper labor (& ordinary folks lower prices), we get a cleaner environment because China absorbs the land and water pollution from manufacturing & sone air pollution.
Is this deal with China good or bad for us ? It is BAD in my opinion. We need to have some manufacturing here to avoid covid shortages & for national security.
Thank you for this intelligent post. Nobody steals our jobs, we allow them to be taken by our own bad policies and/or our own stupidity/greed.
Howdy American Folks. Golly, had no idea there were so many commie loving posters at Wolf Street. China steals and cheats from America. As long as our new president is not dead in the next 6 months, A New Farer World Trade Agreement will happen for America. Beautiful Clean Coal, Oil, and especially Gasoline will be plentiful and burning. Every country will be trying to be more American also……Now Y ALL better just pray a balanced budget comes true.
I’m not a fan of our current President, but there is a certain type of person in the US that seems to want to find the good and overlook the obvious overwhelming bad in every Communist country, Sean Penn being the person who comes to mind as an archetype, they say “lol how great health care is in Cuba” and such, while the people of Cuba literally starve and climb into rubber boats by the hundreds of thousands to float to Florida. These people should shut up and move to these paradises of the proletariat.
I am becoming VERY critically ill with TDS……also RDS……
Do commies have souls?
Do Capitalists?
How about PE and hedge fund gamblers?
Palistinians?
Bernie Sanders?
Mexicans?
Figured from the above Bubba or Happy would know these things…..thanks!
I’m really quite confused.
Debt-Free-Bubba
I trust it will be constructive to point out that solutions to these challenges will not emerge from bluster and factual inaccuracy.
Everything is documented from previous trade negotiations, including every quid pro quo. US negotiators will need to be highly organized when it comes to future bargaining and patient when it comes to being reminded of reams of trade negotiation history.
Accommodating what just happened was a responsible step taken by many governments to protect the global economy. It was probably the right decision. If the chosen approach in the future is to stand firm, that’s exactly what will happen.
The high and higher tariffs on China (and the relatively low and lowered tariffs on Europe) appear to present magnificent substitutional opportunities for European exporters, to the east and the west. Some market share draining away? Leverage being diminished?
This sorry episode has also stripped the pretence that the objective or attainable ‘prize’ is higher tariffs, which is wholly at odds with the narrative hitherto and very helpful to counterparts preparing for negotiations.
This was a bond market warning, plain and simple, and the dollop of _____ it reacted to remains fundamentally unaltered.
I have read that Trump’s climbdown is due to two things 1. Dumping of US treasury bonds by people who no longer believe they are a safe haven and two the unwinding of a rather complex on trade involving bets on the direction of tiny interest rate changes. Bonds still rule.
I dunno. Trump likely saw that there needed to be a cooling-off period because the stock market was heading into a panic, and because people such as Jamie Dimon got very worried publicly, though he supports tariffs.
Treasuries are doing fine. The 10-year yield is back where it had been six weeks ago. It should have never plunged like it did, and now it bounced back (as prices fell). Very strong 10-year auction today. There is lots of demand for longer-term Treasuries, as we saw today.
Come on wolf. Jamie, Blankfein etc. are tax payer welfare queens, especially since 2008. They should be picking up soap instead of giving dumb advice.
THIS.
I’m curious to know your reason for saying “it should have never plunged like it did”. America is punishing countries for implementing retaliatory tariffs but aren’t ours “retaliatory” in the first place? I’m always wary of people who say others can’t do the very thing that they are doing already, it is legitimately crazy
Long-term bonds should trade on inflation and inflation expectations. The 10-year Treasury yield should be at least 2 percentage points higher than average expected inflation over the next 10 years. It was trading as as low 3.85%, which means these people thought that inflation would be less than 1.85% on average over the next 10 years, LOL?
I wouldn’t be financing my attacker.
Nope, Trump did it for the reasons he stated. He put the tariffs in effect to prove he was serious. Just threatening to do so isn’t enough: the other countries were more than willing to see if it was a bluff. They found it wasn’t, and now they want to negotiate. But, it takes time to negotiate with 75 countries (Japan and S. Korea will go first, because they already do a lot of manufacturing here in the US, so they get to go first in line as a reward). Countries that hit back — like China, and soon the EU countries — will get hit back even more (as has happened with China).
Trump recognizes that US consumers, in the aggregate, wield great power. With the exception of food, consumers can simply stop buying things for a few years (only have to replace what breaks). But manufacturers have to sell now. And where in the world will China and the EU find consumers to replace the ones they lose? China will flood the EU with cheap goods (including more cars), and the EU will be in a really bad position, as it loses both US consumers and its own consumers. And who in the world is going to buy all those Audis and Mercedes and VWs? Heck, Germany is already de-industrializng, the whole EU is almost in a recession, and they think they have the power to fight the US? Trump is right to have picked this fight, and the US holds a lot of economic power. Will it be without short-term pain? No, as Trump himself has admitted. But it will hurt the Chinese and the EU more. Will it be better in 3-4 years, and thereafter? Yes.
China’s economy is fragile. Yes, they control a lot of the rare earth metals markets, and they have a lot of power due to that. But, their population is both getting smaller and aging rapidly, older people don’t buy as much as younger people, and they put a lot of strain on the medical system. China’s economy depends on manufacturing and selling a lot of goods. A significant reduction in sales will reduce jobs and income, and that will hit them hard. With China, a lot of positive factors all converged from 2000-2020 to really help them make huge economic gains. Many of those factors have now started to go against them, both internally and externally.
OR the other countries see Trump changing the tariffs plan every other day and decide he is not serious, and roll with the punches until the dust settles. I also would not believe Trump on number of countries lining up to bend the knee.
DJT for 35+ yrs has always believed in Tariffs.
He told us on Jan 21 what he is going to do, he told us before that too. WHY won’t DIms believe him?
He also said after “someone” tried to assassinate him in Butler PA. that he believes he was “saved” (turned his head at the last moment) to do what he is doing which is to totally reset the entire global trading system. Free trade for everyone!
Everyone, including all central banks are BROKE.
I hope China did not think the gravy train would go on forever.
Anthony – …ah, but gravy is liquid. If gravy’s boat is seriously disturbed, it tends to escape over its gunnels…
may we all find a better day.
There just could have been a much better way to go about this.
open to suggestions
And the troops will be home by Christmas!
‘Heck, Germany is already de-industrializng,’
Then they are screwed, because Germany has never been food self sufficient. But they aren’t screwed, nor are they de-industrializing.
Most people are only aware of Germany’s footprint by seeing cars, a consumer product. Behind the scenes in the world of production machinery they are a big player, which btw, does not compete on price. Back to cars: the guy who likes BMW, Benz, or Porsche, is not going away because the price goes up.
Sorry, you’re wrong about Germany:
Industrial production in Germany dropped 1.3% month-over-month in February 2025, following a 2% increase in January, coming more than market expectations of a 1.1% decline. The decrease was largely driven by a 3.2% drop in the construction industry, along with reduced output in the food industry (-5.3%) and energy production (-3.3%). In contrast, a 3.3% increase in electrical equipment manufacturing positively impacted overall results. Meanwhile, production in energy-intensive industries fell by 0.6%. The less volatile three-month-on-three-month comparison showed a 0.1% decline in industrial output from December 2024 to February 2025. On a yearly basis, industrial activity fell by 4%, following a 1.6% drop in January. source: Federal Statistical Office
Just do a Google search, and you’ll see that Germany’s industrial production is going down.
Oh for sure Germany has issues, mainly via the disruption of Russian energy for which they were unprepared. Theoretically they could have caved to Putin’s invasion of Ukraine but didn’t, and stepped up aid to the victim. Without asking for anything in return. So they have had to take some drastic steps, including removing villages to dig up brown coal. In hindsight Merkel’s decision to kill their nuclear power looks unfortunate, but who would have predicted the largest war in Europe since WWII.
Their situation does not amount to being ‘de-industrialised.’
BTW: all the commenters concerned about the US Debt might take a look at Germany’s.
Germany exports more calories than it inports.
I’d be wary out German autos. Porsche sales slumping in Europe and China. In China I can see a real issue competing with Chinese manufacturers as nationalism picks up. Also, if auto tariffs start Germans will feel that too.
Germany debt to GDP ratio is 62.4% with $440 Billion in tax receipts.
US: 123% with $5 trillion in tax receipts.
There’s a lot there. Mostly the 10X higher revenue in the US, and the rapidly increasing and accelerating rate of US indebtedness.
I am not sure why the comparison? It seems to accentuate the fiscal irresponsibility of our government.
Nick,
Germany’s industrial production post-pandemic shutdown in Spring 2020 peaked in Dec 2020. It has been in a slide since then, with ups and downs, but with a general downward slope. With 2015 as the base, the Dec. 2020 figure was 101.7, and February of this year was 91.3. In comparison, France hit 101.1 in January 2021, and has been pretty consistent since then, with Feburary being 99.8. (Information is from ycharts.com).
Yes, Merkel shutting down the nukes was a huge mistake, but Germany’s entire Energiewende program is increasing their cost of power, particularly electricity, and the large consumers of electricity are moving their production elsewhere. This will continue for years to come absent even larger subsidies to their large industrial energy consumers. Residential customers are already paying about 40 cents per kWh (ranges from 30-46 cents, depending on consumption levels), while large companies are paying 30 cents. This is the highest in the EU.
As for not foreseeing the invasion of Ukraine, that was certainly foreseeable after Russia’s annexation of Crimea, and the back and forth in Donbas area ever since. Heck, Trump told Germany they were getting too reliant on Russian natural gas, and they literally laughed at him.
‘I am not sure why the comparison? It seems to accentuate the fiscal irresponsibility of our government.’
That’s why the comparison. US has a much bigger debt problem.
The Struggler,
The figure for German government revenue you quoted seemed extraordinarily low. According to Statistisches Bundesamt (2/25/2025):
“Government revenue as defined in national accounts amounted to 2,012.9 billion euros and therefore exceeded the 2 trillion euro mark for the first time in 2024. Compared with a year earlier, government revenue was up 4.8%.”
That figure makes a lot more sense given the size of Germany’s population (83.6M) and high level of government services. In looking this up, I did see several sources that reported revenue on a quarterly basis and I’m guessing that’s where the $440B figure you cite comes from. Though it should be reported in euros, not dollars. Getting the correct data is important to drawing accurate conclusions or comparisons.
There are 196 countries in the world. 70 countries is not even half,
and most countries have a relatively small trade surplus. The big problem is the US makes nearly 100% junk nobody wants, has bad and way overpaid workers, and most in the US have no interest at all in ‘manufacturing’ jobs at all.
Well, you’ve got Japan, S. Korea, Vietnam, India and many more. Not China, the EU, or Canada. So, that’s some major countries on the chart Wolf has above that want to cut a deal. And once they cut deals, the heat will be on Canada and the EU. China will eventually talk.
I don’t have the name of the 70 countries, if it is the countries that have the larger GDPS, it does matter.
You know the islands with the penguins were 2 of the 70.
I don’t think the last part is true at all. We make plenty of things others want, just not enough of them because our society doesn’t reward that type of work. The stuff we make that is junk is because our financial system rewards “value engineering” for minimum cost and maximum profit.
Our workers don’t believe they are overpaid, exactly the opposite. Trump is in the Big Chair right now because enough workers are tired of competing with immigrants who will work for lower wages and Trump ran around promising everyone six figure incomes.
There is some truth that Americans are loathe to work with their hands today and that’s our own fault. We eliminated shop classes and told our kids to learn to code for 30 years. We looked down our noses at blue collar folks who work with their hands and we’re paying the exorbitant prices for electricians and plumbers because we have no choice. Meanwhile, the people who work with their hands are buying RVs and boats.
Give me a break. he might not have intended it since he really doesn’t think further than two minutes ahead, but in the end he folded. So I wouldn’t call it a “bluff“ as that is something you plan for. But it certainly was not any kind of strategy.
He didn’t fold. He still has the 10% across the board tariff in place, and he has only paused the higher tariffs for some countries, and the sector tariffs (steel, aluminum, cars) are still in place.
You have to follow Trump to know how he works. He’ll try to cut a deal with anyone, if he thinks they are sincere in negotiating. If they won’t negotiate, or if he thinks the other side is not sincere, then he will lower the boom as best as he can.
Really?
Next time you want to sell something I’m sure you’ll start with the lowest possible price.
I’m sure the buyers will line up to offer you more than your asking price…..
Normally when a person wants to sell something they start with a high asking price and then negotiate from there.
I don’t see anything different from that than what Trump has done.
Ask a high price for access to the US market and then negotiate from there.
Had he started with 10% on everybody I doubt they would have done anything at all.
Whack them over their collective heads and get them to negotiate. Those that don’t get whacked again.
He tried this in a different Global Scenario, than say, Ronald Reagan.
Legal Economist-
Interesting comments.
Case in point to your statement “China’s economy is fragile”: the CCP-controlled central bank (and its reliance on gargantuan amounts of dicey local government debt) adds significant fragility and potential volatility to the Chinese money and banking systems.
This issue doesn’t get nearly enough play in the US mainstream media, IMHO.
But US Debt far too huge, too.
I personally would prefer that we have access to goods at lower prices. With small exceptions for items critical to national defense.
I also would sacrifice my neighbor’s good job to buy cheap stuff, if I keep my job.
The climbdown was because he and his friends already profited on the way down, now it’s time to profit on the way up, until next time. And because he’s a stable genius, and implementing insanely high tariffs one day and then dramatically changing that policy a few days later is what stable geniuses do.
Ha ha his apologists make me laugh. He is a chaos agent, nothing more.
I think China played right into Trump’s hands today. Their retaliatory tariff’s gave Trump cover to calm the markets and DC by giving a break to countries that he can claim are cooperating with his trade agenda.
I feel the need to clarify I am not a Trump fan, but he may be doing the right thing on this issue. Time will tell.
The markets’ reaction is not a huge surprise given the tariff’s will have a significant impact on future earnings.
Future earnings have nothing to do with that market move or the market moves down. Sentiment and short covering.
If it isn’t clear from the past few days that fundamentals are fools gold when it comes to markets then nothing will
And companies can’t blame djt when they announce earnings over the next month.
Oh sure they can. Exporter can blame world-wide anti-American feeling for loss of sales and customers turning to non-American suppliers. Importers can blame higher prices due to foreign companies charging more to front-run tariffs. This is easy and likely true.
Wolf,
Great article. I came to the same conclusion at 11:30am today and I’m entirely out of the market now. This is ridiculous. I don’t know how to pick stocks or even ETF’s when everything revolves around Trump. Even the conservative stuff I used to own is whip-sawing. No country or vertical is immune.
I think you’ll agree that inflation isn’t going away anytime soon which leaves the fed no room to rescue this fiasco. This is going to be a long drawn out slide. Yes, it’s possible we might be better off in 3 or so years but the interim looks to be hell.
I don’t mind a couple of reciprocal tariffs to try to get some healthy negotiations going but using tariffs as a tool to eliminate trade deficits with every country is insane. We are never going to have balanced trade with poor and under-developed countries. We should be happy to get their cheap t-shirts and sneakers and pay more attention at home to how we can keep our own services prices under control which is the main contributor to inflation.
I feel sorry for all the 60 and 70 year olds who are trying to optimize their portfolios. (I’m one of them) The younger people have the 10 to 20 year horizon to wait all of this out.
6-70 year old should not be in the market I think. They can easily earn decent yield in fixed income.
I can never fathom being this old and be in stocks.
@jon Both my parents are in their 90’s and doing great, I’m in my early 60’s (and in better shape than my Dad was at 40) I didn’t care ar all about the recent market correction since I’m planning to have 30+ years for the markets to go back up.
History has some lessons for you.
The safest portfolio can be based on bonds (in several currencies) but must also include some stocks, RE, and alternative assets to offset money printing risk.
You have to prepare for deflationary and inflationary situations.
Sort of following the idea of an Efficient Frontier in allocation strategy. There is a sweet spot for risk adjusted return. Historically around 30% equities and 70% fixed or other income assets.
My Mother is 98 and is an avid buyer of Stocks, She loves the 50 + dividends she receives twice yearly. She pours over the WSJ and other Financial papers. She is another Buffett and lives for the Buy and rarely sells. Never invests in “Penny Dreadful” stocks, only top 100 and loves the ones who are just outside that as they will try harder.
Sometimes a lifetime of being invested is a good thing and like Buffett, she is currently hoarding cash and paying huge tax bills because of it.
She is a wee cany Scot and the family apples did not fall far from her tree.
I just read (according to AP) :
“THIS IS A GREAT TIME TO BUY!!! DJT,” Trump wrote on his social media platform Truth Social at 9:37 a.m.
Well I’m going to sign up for Truth Social now…
Unbelievable. Incredible. Beyond anything that I could ever imagine coming from the POTUS. And I’m a Republican. It’s an “All-Trump” market for the next 3 years.
And amazingly, that insider investment advice is free!
I don’t feel bad for 60-70 year olds.
1. They shouldn’t be in equities anymore
2. They have had 40 years to invest in the frothiest stock market of all time. They have made 20-30x
3. Their houses are way overvalued.
I feel bad for people my age and younger who have high housing costs and can’t even think about saving for retirement
Lots of boomers have nothing saved for retirement. This is a huge issue.
If you are young, unlike older people, you have time working for you not against you.
If you have high housing costs then you should figure out how to reduce them by moving, moving in with your parents, or sharing a house.
If you have trouble saving then maybe your expenditures are too high and you need to reassess what you are spending your income on.
When I was young I hardly ever went out to eat. And when I worked I usually had a lunch from home. Others would spend lots of money on eating out lunch during the workday.
One thing I have never understood about people complaining about high food costs is why they don’t plant a garden to reduce costs.
Lots of stuff is easy to grow and it doesn’t take a lot of time or effort to grow things like potatoes, peas, and beans.
Yeah, us older people used to do/still do things like that. You can save hundreds of dollars a year doing it and your return on investment is huge.
You’ll also be eating fresher, better tasting food and getting some exercise as well – which in many cases is sorely needed by lots of fat, lazy overweight young people.
If you are young you can afford to take risks and change.
Do it.
But, it’s so much easier to blame the boomers.
You hear that everyone! You can save “hundreds” of dollars a year by making sandwiches and somehow magically that will add up to enough to buy a starter home at 6x median income by the time you’re 50!
Even better you can grow a garden in your non-existent yard! But you’re saving money by renting right? So better run that by the “people of age” that run the HOA who want the lawns to look like a golf course.
The mass amnesia of these people is insane. How about we go back to the good-old-days with 15% mortgage rates and homes at 1-2x median income? I know young people would love it so who’d be crying then? I hope we get to find out.
Short squeeze.
Bigly.
with hedge funds caught in the middle!
Love it, so long as there are NO BAILOUTS.
The 10-year is up over 3% today and 10% so far this week. I find that interesting. I’m sure that the FED finds that interesting too.
word on the street is it was Japan selling bonds hard. Everyone thought that it would be China doing that. That is what caused the reversal in tariffs. And also you are seeing Bessent having more sway than Lutnick. Odds are that Lutnick will be gone soon or given a different job. If the yield on 10 year continue up I think you will see a lot of spin going on.
“word on the street is it was Japan selling bonds hard.”
That’s just internet BS. Japan’s government debunked that rumor totally and clearly and specifically.
Could be that the private sector is unwinding the good old Yen carry trade as rates in Japan are set to rise. Can’t borrow free yen and buy USD treasuries without some stability and cheap Japan rates. I have no evidence just a thought. The carry trade could all be done in the USA.
Wolf…right you are.
Here’s something that is not BS.
I’m here in Tokyo with my Japanese wife of 34 yrs and watching the NHK news last night, it was announced that after an all day meeting between the PM and other politicos, they decided to print more money and give “some amount” to every man woman and child in the entire country! Even though the amount hasn’t yet been decided, “Everyone will get something!” 2022 Covid overreaction redux? This from a 1,800 yr. culture that is currently 300% in their debt to GNP?
Not “print” but “borrow.” The BOJ is now un-printing slowly.
If not Japan, then who? You said above that “The 10-year yield… should have never plunged like it did.” The plunge implies that a LOT of Treasuries got sold in a very short period of time; presumably, some Whale(s) started the drop, then others followed… Who plunged first?
For each Treasury that was sold there was a buyer and bought it, and people bought just as many Treasuries as others sold.
The 10-year yield is now back where it was a few weeks ago, after having plunged due to a panic in the stock market that caused investors to chase after Treasuries, which caused their prices to jump and yields to fall. And it reverted now.
Foreign holders of Treasury securities are reported monthly, and I report on it right here, and all you have to do is read it. There is no reason to make up bullshit just for the heck of it.
Why invest in America anymore when a tweet can make or break your investment in a matter of seconds. Also curious why the market started rallying before his tweet. Oh wait he covered his all his administration and family from investigation by earlier tweeting now is a good time to buy, so they have an excuse on why they jumped in early. And SEC will never investigate insider trading on them anyway.
Where then would you invest? Markets around the world dropped due to what Trump says. They’ll probably go up tomorrow, as they did here in the US.
Yes, the markets favor the big traders, the ones with algos, the ones who get insider information, etc. Not a fair playing field at all. But, long-term, there is money that can be made. I just recognize the risks, and adjust accordingly. I just retired 12 months ago, but am about 2/3 in money markets, CDs and multi-year guaranteed annuities. So, the market can screw around from day to day, or hour to hour, and it doesn’t impact me much. If the 1/3 in the market does great, I can spend more (but likely won’t). If it drops 50%, I’m still fine — might have to take one less big trip a year.
I bought the day before. I’m not an insider. When you have that much of a drop in the market, based on a clown’s decisions… you have to make clown moves yourself,.
I bought the close on Friday. I’m not interested in more unless the S&P gets near 4500 again. Who knows — 90 days from now?
In my youth they referred to that as “monkey see, monkey do!”
The parents also asked, “If Jimmy jumped off the Water Street bridge, would you?”
Love this: “This is what happens when edgy traders and algos and people thinking all this is a video game react, after the gigantic run-ups of stock prices in recent years to these precariously lofty levels.” The president’s job is to further political policy goals, not to placate markets. So, let me add to you comment, Wolf, that, also, this is what happens when folks who consider themselves to be financial sophisticates have a low ceiling on their political knowledge. That politics takes precedence over their views of the math beffudles them.
I wonder if those around the President knew beforehand and bought S&P futures?
If that’s not a legitimate question then I think you forgot the /S bigly
No. Trump did not tell everyone a few hours in advance. Most working folks missed the news because well they were working an actual job. And or they don’t subscribe to truth social. Definitely gave an unfair advantage.
Trump announced like 4 hours earlier on his Truth Social account that it was a good time to buy. I think anyone following him there that took his advice were certainly rewarded. Whether that counts as insider trading I have no idea.
1. Billionaires don’t need to day-trade. Too much hassle. Maybe some underlings.
2. Trump told everyone publicly a few hours in advance that today was a good time to buy stocks.
Will he extend the same courtesy about the time to sell?
1. Billionares shouldn’t neet to release their own $h1tcoin.
Trump has been involved in multiple pump ‘n dumps.
I will not soon forget when Carl Ichan excused himself from the first Trump victory party.
The rumor is he whispered to his buddy Don: “I’ll be right back, I have a few billion to put to work.”
And the market went up, the very next day!
The answer to the question: Mr. Greedyfeller, how much money is enough? “Just one more dollar!” Yukyukyuk…
They DONT need to. Or to run for president… but they DO anyway.
There has been a hughe volume in call buying just 20 min before the announcement.
Exactly. Definitely leaked it to….someone. Whoever sold them those calls got screwed.
GOLD had a GOOD day today.
SILVER almost as good.
Be right and sit tight.
There is big money to be had, and lose, in these frantic markets, but as an old person, me thinks I’ll do the ‘tbill and chill’ with the bulk of my money. Keep just enough to try to catch these spikes, tight stops and all that.
Here is a possible China Tariff effect on prices at Walmart.
I have bought a few cheap made in China 6′ tall floor lamp reading lamp combos for my self and friends in the past three months.
They are flimsy with screw together poles but good enough for home office use to me, light bulbs are not included. They come in white, black, and faux chrome and I have been paying $15 for them, the Walmart checker guy said they sell a lot of them.
Today I bought another one off the shelf and the shelf price tag is the same $14.95 price as always,
When I ran it through the self service checkout it rang up as $29.95!
I needed the lamp so I paid the $29.95 and then went directly to the returns counter and had the lady double check the price, and it was indeed now $29.95, no longer the $14.95 on the shelf tag. I kept the lamp and did not start to argue California retail law with the returns lady.
The other two I bought in the past were both white, this one was black, but they all had the same $14.95 shelf price sticker.
A “Straw in the Wind” at Walmart?
JJAY- not saying there’s front-running, but another anecdotal addition. Shopping for a 3-way LED bulb at the Rohnert Park HD two days ago, found the price had increased from last month’s $8.99 to $10.49. If you require meds to keep you functioning among the living, understand that the officially-inferred policy towards imported pharmaceuticals will likely be spiking prices on your generics…
may we all find a better day.
I have become so accustomed to endless price increases from Spectrum, Anthem, Shell gasoline etc. that I just accept them.
I have watched the price of a 16 ounce box of Barilla pasta go from 99 cents pre COVID to $2 now, I figured at least they kept the same 16 ounce amount in a box.
Then about three weeks ago, the $2 -16 ounce box of Barilla pasta became a $2- 12 ounce box for all the Rotini, Elbow, Penne items!
The spaghetti type boxes were still 16 ounces for $2
That only lasted two weeks, I imagine no one was buying the $2 -12 ounce pasta, because now the 16 ounce Rotini etc. boxes are back once again!
Reminds me of the “Oil Shock” gasoline prices going from 25 cents a gallon to $1 a gallon and you had to get in line at 4 AM to get it back in the early 1970s! Finally the gasoline prices stabilized at 75 cents a gallon and it was readily available again and we were happy to get it!
And then there was a “Coffee Shortage” and a “Sugar Shortage” as Big Business looked at Gasoline Prices tripling and thought “Great Idea!”
“To see the future, look to the past!”
I am confused. Our Dear Leader said prices would go down as soon as he was in office. Here you are saying that is not true? It is not wise to question Our Dear Leader so you must be wrong. Please admit your error.
PS to 91B20:
Not to mention the price of a tube of Lays “Stax” potato chips slowly went from about $1.40 and a little cheaper than Pringles, to now costing the same $2 a tube as Pringles, and that is the Walmart price for those potato chip tubes!
And Systane Gel Drops10ml going from about $9 pre COVID to $15 for the last tiny bottle I bough, also at Walmart!
JJAY- re: ‘Stax’ (Frito-Lay) has been trying to capture some of Pringle’s market for a few years, now, offering their similar product at relatively deep-discounts, at least at Safeway. More recently, (again, at Safeway) Stax has left the field, and local market, to Pringle’s-guessing they found more market-traction in your area, and are now pricing at competitor par (…not an endorsement of either offering, btw…).
may we all find a better day.
This lamp was in the US long before any tariffs hit. Connecting the difference between price on the shelf and at the cashier to tariffs is manipulative BS.
@Wolf, it is also interesting to look at the price of things today as they are related to a percentage of minimum wage.
A friend (who makes over $500K) was complaining about a $17 movie ticket and I reminded him that when we were in college in the early 80’s movie tickets were $5 but we only made $3.35/hr compared to the $20/hr most kids in CA make today (after moving the CA “fast food” min to $20/hr a little over a year ago most starting pay is at least $20/hr).
Sneak that guy in your trunk at the drive-in movies.
“Sneak that guy in your trunk at the drive-in movies.”
Many could fit in my ’68 Cadillac trunk.
You’re liable to burn your house down with a Chinese-made lamp.
“We decided to pull the trigger and we did it today and we are happy about it,” he said. “If you keep going, you are going to be back to where it was four weeks ago,” he added.”
He has always been a stock market pimper and pumper, and here he is again. The people who thought he would allow a stock market wipeout are chowderheads. He’s an asset bubble blower and money printer of epic proportions.
Yeah, I lost a huge amount of respect for him.
He has no principles.
Same here.
Is it already time for Captain Renault again? “I’m shocked — shocked — to find that gambling is going on in here!”
Z – he’s always been far from alone in that regard (depending on one’s definition of ‘principles’, of course…).
may we all find a better day.
The elephant in the room is always China with biggest trade deficit.
I’d have preferred if he has not levied any tariff on anyone except China.
Happy that he increased tariff on China again and decrease on all for next 90 days.
China retaliated big time and others didn’t.
I think this is the right move.
Canada and the EU retaliated also.
So he’s even a hypocrite on that front.
Haha ha you just figured this out now? Have you been living under a rock?
As in Marriage, when the trust has been shown to be abused time and time again, the marriage rightfully ends.
Who, will now invest $Billions in the USA if trust in the Presidents word has been lost. I am sorry but I am done with Donny.
No argument can be made in support of anyone who reneges on a promise a day after they publicly state that promise.
I believe, MAGA is now fatally wounded and as with many others I now have no faith in this Administration.
BTW where is the First Lady, I do feel for her at this moment. Brains and Beauty is to be admired.
i haven’t had faith in any administration in my lifetime. they’re all corporate/wall street sellouts.
BINGO.
Just wanted to say I paypalled in a donation- thanks for the outstanding content as always. Cheers!
Thank you!!!
Speaking truth to power is dead. Speaking power to truth is in vogue. Making big money when you are close to the plate and know what the king is about to tweet is the new power game of the court jesters.
How many hours before the tariff pause did Trump tell everyone to calm down and buy stocks? I listened and made a killing today. Did you miss out?
I could see being really angry if he only told a small group of people to buy stocks, but he told everyone.
Why is the President of the country pimping and pumping and telling people to buy stocks when the top 10% own 90% of the market, and most people don’t have the money to even buy on such a whim?
Amateurs rob the middle and working class, professional thieves target the wealthy people.
Willie Sutton – “I rob banks because that’s where the money is”.
Reminds me of how Louis XVI ran things in France before the revolution.
Now don’t forget Nero and Caligula..he sure is giving them a run for their money though
How anyone can have their life savings in this casino is beyond me. I am happy with my 4% return on CD’s, Treasuries, and Tax exempt funds. If I want to gamble I’ll place a bet on the Masters golf tournament. It’s a lot more fun, and if I lose $50 or $100 who cares. The stock market is for suckers that listen to the like of sheisters like Jim Cramer. Only the big guys make out because they have inside information.
Because you invest over time. Time in the market is better than timing the market.
Any person who is 30 plus who has piled a healthy percentage of their monthly salary into vanilla index funds over their working years is sitting on a fat nest egg. How is that a casino? The house didn’t win. Pretty much everyone in the ‘casino’ won. So much negativity despite that simple fact. That said, anyone with shorter time horizons could benefit from cashing out and sitting on the bench going forward. This volatility could last years.
Well, you don’t technically “win” until you cash out.
At this point I’m only buying stocks for my (young adult) children. I don’t expect to be around to see them cash out, but I feel pretty good about their odds given the likely timeline.
Trump may as well have waved his magic wand or thrown a little fairy dust at the NYSE.
DJIA up 7.87% in one day. Nasdaq up 12.16% for the day. What a casino. Most people are ‘winning’ on paper. When the casino closes its doors, there will be nothing but losers.
NOTHING BUT LOSERS, except the casino, of course. It won’t be ‘and they lived happily ever after’.
We keep hearing about some imminent wipeout, yet it marches higher, and higher, and higher. The billionaire class has cornered and captured every market and government. They are MAKING THEIR NET WORTHS GO UP BY FORCE. There is no down, only up. DOW 100k, Nasdaq 50K, S&P 20k. There will be misery for most, but not these pigmen. They cry when they lose 2%.
As Wolf keeps pointing out, the US economy is a big machine, and as of right now, there’s no reason to believe that conditions are recessionary. Even if we’ve had rather anemic growth in recent years, it’s still growth, and I’m not surprised the market hasn’t turned yet. Remember that the last big stock market crash was only just over 5 years ago. It could be a while yet before there’s something comparable.
I’m not discounting the possibility of a Dot Bomb 2.0 either, but the economy of today is different than 25 years ago, and there may be some things to offset tech weakness.
Is a “crash” that recovers the same year due to money printing really a crash, or a blip?
I’d argue a healthy alignment cannot happen in a money printing environment.
The casino is going to close its doors? Are you kidding me? Sure we might hit a few circuit breakers here and there. But even after total and complete capitulation we will pick ourselves up again and the market will reach higher. Guaranteed. If we get a multi year drawdown of epic proportions, retirees will get killed, millennials will get very badly bruised and the young will feast on once in a lifetime bargains in equities (assuming they can secure and keep a job during the not fun part of the business cycle). The circle of life continues.
The financial and emotional abuses that the young and working classes have suffered at the hands of the billionaire class the past 25 years are incalculable. If the world were fair and just, the billionaires would be completely destitute and the young would be rendering their lifeless bodies into dog food for their pets.
Since trump said what he said during market hours the extreme market reaction was during market hours. If he was on the up and up, he would have broken that news during closed hours so everyone could have reacted on an even keel, but no. It must be nice to know people in high places.
He told everyone a few hours in advance that today would be a good time to buy stocks. He told everyone before the announcement.
but someone else would have had to sell, so for each person buying because it’s a good time, someone else would have had to sell, thinking it was a good time to do that.
Yes, that’s what makes a market. People today sold all day long.
I think I need to sign up for a Truth Social account for my market alerts.
Moon – I believe that was one of his main points in frontrunning the news on Truth for his subscribers – to get more subscribers.
He’s saying that most people were at work and not able to look at twitter or log onto etrade
“So now we’re down to stock markets spiking or plunging in a huge manner based on what the President says.” – Wolf Richter.
“It’s good to be king.” – Mel Brooks in a movie whose name I forgot.
And Tim Petty
Tom
It’s sickening to me that a man (DT) should have this much power without any restraint or consequences for his actions.
The rest of the world sees it too. There have been plenty of ups and downs over the decades, but this is markedly the end of trust and respect for the American government.
Lol you people are so unserious. They didn’t trust or respect us before either.
Maybe not trusted as BFFs, but as tolerated business partners, and a country who can be trusted to manage the world’s reserve currency. That’s being irreparably thrown out the window. No previous administration has been unstable enough to harm that as much as this one due to the lack of honoring checks and balances, without that all it takes is one lunatic to throw the world into disarray. Who WOULD want to choose that as their business partner? Think, man.
If you think people respected the Biden admin around the world (or at home) you have lost your mind.
ben r, the u.s. did more to damage its trust in the reserve currency by printing $5 trillion from march of 2020 to august of 2022 and borrowing and spending $7 trillion than any idiotic actions from trump could cause.
@franz those actions were approved by Congress and they were the result of a global pandemic that shut down the world. It was implemented poorly with little thoughtfulness but it was an emergency. Reacting to a pandemic was necessary, unlike losing trillions to tax cuts for corporations/wealthy starting in 2018 which has greatly contributed to those numbers.
@CSH Biden wasn’t great in many ways, but he was stable, reliable, predictable. Just what the world is looking for in the managers of their reserve currency. His actions didn’t cause the world to reconsider whether they should stay invested in US bonds.
Congress, not the President, has the power to set tariffs. If Congress would do its job, we would not see all of this chaos and opportunity for market manipulation from the oval office.
Trump also stated that large companies could come to him and ask for exemptions to tariffs – great opportunity to bribe DJT!
This. It’s highly likely that the courts will find his exercise in tariffs unconstitutional unless he rolls them back first.
Oh honey, do you still believe in Congress? Along with the Tooth Fairy and the Easter Bunny?
We the people gave it to him! He dis not take anything.
Congress could pass a bill removing Trump’s authority to do what he’s doing. He’d veto it, of course, so it would take a 2/3 majority of both houses to override the veto.
This won’t happen tomorrow, but if the market tanks again and small businesses can’t get the parts they need to stay in business, etc., it isn’t out of the question that such a bill could pass.
I had a good chuckle on your website: There is an ad for a company that sells t-shirts with graphic designs on them. One t-shirt says ‘DISAPPOINTMENTS…ALL OF YOU.’ One could interpret this to mean Wolf’s readers/commenters.
“I thought that people were jumping a little bit out of line,” he said. “They were getting yippy, you know, they were getting a little bit yippy, a little bit afraid…”
This is just absolutely bonkers. The vocabulary of the man says so much about him. I’m pulling out my hair over all this bs. There’s no escaping it. On a positive note, thanks to following Wolf for the past 1.5 years and all his wonderful commenters, I’ve tbill & chilled through this market fiasco, significantly beating S&P returns and positioning myself well with near-cash on-hand and predominantly out of stocks at ATH valuations. Made a few bucks selling at the top months ago and recent short options. Happy trading. Thx ya’ll.
A new industry has born that is trying to understand Trump speak. Earlier it was Fed speak.
We forget that Fed and Govt can hardly ever make things better but can easily make them worse.
Maybe these obsessions are a symptoms of a disease in our country.
Feels like he is making it personal with China and that is bad. Time to start shopping for products with “made in China” label. I’m all for bringing manufacturing back to US but let’s do it in a smart way and hold those that gave it away to start with accountable.
As I said above, Trump has always been consistent on negotiations. He will negotiate with anyone — Putin, Iran, N. Korea — if he thinks they’re negotiating in good faith. If he decides the other side is not, then he’ll lower the boom as best he can. Ask Zelensky. And Trump is not sure about Putin, which is why he has thrown out the possible big stick of a secondary tariffs on Russian oil. But he’s waiting on that at this time, to see how negotiations go.
Consistent on flip flopping! Why would anyone trust him. Plus in less than 4 years it will all change and the world knows that. Much better to put tariffs back in hands if Congress where Constitution defined them. Technically he is supposed to utilize for national security but of course one can argue that about anything for any reason.
He is not sure about putin because he is a poor judge of character. How could anyone be in doubt about putin given his long track record of vile behaviour.
Wow…so many delusional people
, and I don’t mean Trump. You may dislike the President but yet you clearly don’t understand him, and don’t try to either. You all make up crap to justify your thinking. I have known of President Trump since the 70’s. If you listen…he makes sense, whether you agree or not. He is a negotiator. He thrives on it. He thrives on succeeding. He understands Putin. Putin needs to be perceived as winning, at least partially, so as not to appear he surrendered. He bides his time, makes him look stronger. In the end he will agree to some little land, and cease fire, end of war. This is why Trump keeps pushing Greenland. More missiles targeting Moscow. More pressure will be put on banks to shut Russia out of markets.Putin needs trade, similar to China…that’s why Trump will get his negotiations successfully. There is so much more to Trump and his words than you recognize, you are being played!
Candyman, you hit the nail on the head. Too few people really understand Trump. Too much TDS, and even those not afflicted by it think he just shifts in the wind. He doesn’t. As the famous line goes, don’t take him literally, but do take him seriously. He’s talked about tariffs for years, since even before his first term. Not sure why what he is doing is surprising anyone.
Candyman,
You’re not nearly as cool as your movie character.
Remember the old formula for 100 – your age in stocks?
So if you’re 50, put no more than 50% of your portfolio in stocks. And that probably also means you have some equity in a residence, maybe own a small business, etc.
If you are 70 then you have 30% in stocks, and if the market goes down by 50% you’ve only lost 15% of your nest egg. Survivable. It’s when seniors invest like 25 year olds that they get into trouble. Everyone seems to have forgotten this in the QE era.
But what if we have another blast of QE?
Take a look at the Jump in DJT stock. That’s his own company. It spiked 20%. Trump has been monetizing the Presidency since 2017. It’s getting worse. He’s corrupted the enforcement agencies so he’ll be allowed to enrich himself. Some people think he’s manipulating the stock market with his tariff charade. Did anybody make a big buy of TrumpCoin in the last 24 hours? I have no illusions about the corrupt nature of Donald Trump or his family. I’m not a Democrat but they had 4 years to put this fraud in prison, and they never managed to do it. He’s guilty of serious crimes; he lies, cheats, deceives and exports. He extorted Bezos, Zuckerberg and Musk for tens of millions. That’s a matter of pubic Record
Both parties and their respective politicians are corrupt to the very core. Look at the wealth of CONgress. They didn’t amass that from their salaries, they are bought off.
You ain’t seen nothing yet. Just wait until the stock market bubble pops. The last few days have seen just a few shots across the bow. Stock markets always crash. We’ve had no crash for 16 years. Nobody knows when. Could be in 16 more years, could be tomorrow. Sort of fun if you are into it.
“Katte kabuto no o wo shime yo”
“Tighten the strings of your helmet after victory”
You will never know what could happen next.
Play smart and stay safe, friends. Sh1t is going to get worse before it gets better.
President Trump knows what he is doing, I voted for him, yes and will vote for him again. It’s time to make the paying field level, and he has the courage to do it. If we don’t stand up to the communist China, who will? MAGA!
How are you going to vote for him again?
Let me guess, you believe the only way to save capitalism is to adopt socialism and communism (for the 1% anyway). Another hedge fund bailout incoming!
bank on it.
Obviously not.
WB wrote: “hedge fund bailout incoming!”
I am seeing online chatter now about SOFR and the Federal Reserve getting ready to bail out the poor over leveraged Hedge Funds.
Hmmm. Stock markets are down again at this hour. Was it something fearless leader said ?
Internet bullshit pollutes your brain permanently and irreparably.
Stand up against lower prices for quality goods? Really? Seriously?
“oh the world doesn’t respect the US anymore”
Until they need weapons, or satellites, or rocket launches, or defense, or NATO.
Stop echoing childish media talking points.
Respect and dependency are two very different things. At work, for example, I have no respect for leadership, but am dependent on getting along for a paycheck. Sure, I could leave but the grass is seldom greener and it isn’t without risk. And of course the US purposefully created those dependencies and we footed the bill for it, but we do get our way on almost everything internationally.
Germany, with a very debt averse people and govt, just amended their constitution to allow the debt for a big arms buildup. Apart from the obvious reason, the largest war in Europe since WWII, there is also the cold attitude of the new US regime to NATO.
Go long tar paper shacks and gruel.
“The huge spike, following the selloff, evokes further parallels with the Dotcom Bust and Financial Crisis crash, in the middle of which similar spikes occurred.”
Nonsense. There is no parallel at all to past spikes and busts. This current volatility is caused by Trump’s erratic decision making that alternates between panicking the world’s investors, and massive relieve that perhaps things aren’t going to be as bad as we fear.
Had to read your 2018 blog and found this nugget from “Ed” in the comments:
Ed
Sep 24, 2018 at 5:20 am
Ha, ha. Thanks.
Another nugget is this quote from H. L. Mencken:
“As democracy is perfected, the office represents, more and more closely, the inner soul of the people. We move toward a lofty ideal.
On some great and glorious day the plain folks of the land will reach their heart’s desire at last, and the White House will be
adorned by a downright moron.”
We certainly had that the last 4 years. And the 4 years before that. And now….
Correct. Now we are left to wonder who is front-running this. Seems to me that the “faith” in “market” forces, or free, fair, and transparent “markets” is decreasing. Why else would those hedge funds be dumping their treasury holdings?
Is there a hedge fund bailout coming? Would love to see Wolf dig into this. Didn’t the Dodd-Frank legislation authorize some sort of “bail-in”?
Interesting times.
No hedge fund bailouts or bailins are coming at all.
Why own stocks, etc.? Depends on where you are in the conspiracy chain game making the Pareto distributions; it’s probably a no brainer for the Madam Nancy’s, Biden’s, and the Supreme’s milking the monopolies, until a 1906 style earthquake.
BACK DOWN
STOCKS STAY MANIC
DOW -2000
CALLS FOR INSIDER TRADING PROBE
“It is better to be feared than loved, if you cannot be both.” – Machiavelli.
The stock market does not care about respect or love for people or for countries. The stock market and capitalism in general only care about fear. As for Trump, most commenters on this site do not appear to love him. They appear to hate him. They are afraid of him and his policies, so they hate him. That’s fine with Trump. If you can’t love or respect him, fear him.
And today, Thursday, Trump took a dump amd stocks followed suit, down 5%.
Not to worry there will be a deal and in a flash, it is back to business as usual.
What Americans can’t accept is they have been playing a better game!
And holy crap their leader has told us the truth all along! Silk Road or China First ring any bells?
Now we think China cannot survive without us. It is a big world and they could adjust better than we can.
Our only plans is more soending and more debt. How well is that working for our kids?
Basic observations and questions for Wolf and the many smart readers here:
When evaluating the size of U.S. government debt, commentators consistently make comparisons to the U.S. GDP. For example, using current figures, they say that the federal debt is about $36 trillion and that GDP is about $28 trillion. So, the debt to GDP ratio is about 1.3. They then conclude that the debt is a bit high, but we can manage it.
A statement: The U.S. government does not “own” the U.S. GDP. What it “owns” is the roughly $5 trillion annual inflow of Federal tax and fee revenues.
Question: So why is U.S. government debt judged in light of GDP? In the business world that I know we judge debt relative to *earnings*. It’s called leverage. We know that the U.S. government has negative cash flow, so you can’t even measure its actual leverage. Being really generous, we can use revenue instead of earnings. So, divide $36 trillion of debt by $5 trillion of revenue, and we have over 7 times leverage on *revenue*. It would take over 7 years for the U.S. government to pay off its current debt *if* it didn’t spend a single penny AND it didn’t have to pay interest. In the business world we would never invest in such a proposition (unless the payoff was the cure for cancer or Alzheimer’s or something equally magnificent).
Yesterday’s scare in the U.S. Treasury market makes this conversation absolutely frightening. Yes, we can create more money to pay down the debt, so no credit risk, but the purchasing power/inflation risk is massive.
Please convince me that I’m wrong. I don’t want to be right.
Take a step back from the edge Thomas and recognize two things 1) this is the state of all government (although the degrees vary), and 2) recognize that you must those earnings (cash flow) in something (money) and therefore the demand (value or purchasing power) of the “something” being used to set the “price” is very important.
Hence, why the founding fathers were so insistent on a “constitutional currency”. While there will always be nefarious actors in society, the founders recognized that the “yardstick” by which we determine prices is very important. The founders explicitly wanted a commodity-backed currency (money system) to minimize the fuckery, or at least make it easier to demonstrate that fuckery had occurred. Although, such ideas seem to be ignored by all politicians these days…
Interesting times.
The basic principle is that the economy overall generates tax revenues for the government. So unless tax laws are changed, growing GDP means growing tax revenues, and therefore more receipts to pay for the debt.
But there are many other ways to look at the burden of that debt and deficits. So read this:
https://wolfstreet.com/2025/03/27/us-government-fiscal-mess-debt-deficit-interest-payments-and-tax-receipts-q4-2024-update-on-an-ugly-situation/
which includes these charts, among others:
Thanks, Wolf. I just went back and read (again) your article from 2025-03-27. Ouch. We do indeed have an ugly national debt situation on our hands. Soothing whispers from my fellow commenters notwithstanding, I remain worried. In any case, thank you for being the one source of financial analysis that I can trust implicitly. When is your next appeal for readers to contribute to support your efforts? I’m in.
Doubting Thomas — has it occurred to you that the US Federal Government is NOT a business (nor a household, nor a municipality, nor merely one of its constituent states)?
Because the answer lies in its nature just as assuredly as a leopard is neither a house cat, nor a flea, nor a grouse nor an elephant …
Here’s a hint: Georg Friedrich Knapp …
The Indian motorcycle brand called TVS Motor Company sold as many motorcycles throughout the United States in March 2025. And no, we are not talking about electric motorcycles for children or motorized bicycles.
As far as I know, they only sell the UK brand Norton bikes in the US. Not a big seller in the US.
I wonder if Norton’s still leak oil like they used to. Probably not, but that was their reputation. I wouldn’t buy one today.
TVS and BMW Motorrad collaborate in the design, development, and manufacturing of motorcycles. The alliance between the two companies was established in 2013.
TVS Motor reports its highest sales ever, forecasting 17% sales growth by March 2025, and electric vehicle sales increase by 77%.
MW: U.S. Budget Deficit Widens to $1.3 Trillion as Interest on Public Debt Hits Record
Wolf, do you think we’re on the precipice of the USD losing reserve currency status? I’m noticing gold hitting new highs, EUR gaining relative to USD, and treasury bond yields increasing even though the CPI came in slightly lower than expected. What do you think?
Read this. I just published it a few days ago. It answers your question. But you gotta read this stuff:
https://wolfstreet.com/2025/03/31/status-of-us-dollar-as-global-reserve-currency-central-banks-diversify-into-other-currencies-and-gold/
Got it! Thanks!
@Doubting Thomas The US has a lot of debt but it also has a lot of income (and a big GDP it can tax). Sometimes it is easier to drop a bunch of zeros put things in perspective.
So, divide $360K that Bob owes on his home by the $50K he makes every year and we have over 7 times leverage on *income*. It would take over 7 years for Bob to pay off his home loan.
Bob is fine, so is the US (despite having more leverage and a higher debt to income ratio than I would want to have) both should work on paying down the debt vs. borrowing more.
It’s bizarre to me that so many people are bamboozled by the sheer size of US Federal deficits and debts; the derangement is so totalizing that it apparently prevents them from asking the vastly more important question: WHAT is it being spent on, and is it WORTH it? Too often the answer to the latter part of that question is NO! But until that becomes the focus of the angst and anger, your elected representatives will get away with allowing your nation to rot while their donor class loots it. Snap out of it, already!
One thing to keep in mind: inflation expectations in assets, both real and financial, are “entrenched”. Starting with the Greenspan Put and then QE and balance sheet expansion (i.e. money printing), it seems to me the Powers That Be will go to great lengths to keep asset prices rising.
Bubbles are a thing, but I don’t know that a society has ever had such aggressive, overt policies to boost financial asset and real estate prices (if a “can’t-lose” asset exists, it will tend to bubble). Not just monetary policy but fiscal (in housing particularly, at all levels of government). And I think market participants anticipate that kind of support.
However, Player 3, inflation, has entered the game, so that ties the PTB’s hands to some degree. Politicians ignore inflation at the risk of losing their jobs.
What do legislators view as motivating their voters? Then what do legislators and financial authorities view as improving their own personal situations? I think these answers will drive their response, as well as the unleashed djinni of inflation.
Market manipulation, plain and simple. The rich will get richer and the poor don’t even have the opportunity to play. It’s disgusting.
@BH The main goal is not to make the rich richer but to keep the banking system solvent. If the price of new homes and cars dropped by 50% most people would stop making payments on the home and car that was worth less than they owe…