“Curiously enough, the only thing that went through the mind of the bowl of petunias as it fell was Oh no, not again.”

In times of financial stress, the market tends to take on a momentum all of its own. We may be in for further shocks, instabilities and dreadful No-See-Ums as investors try to discern what comes next following Trump’s tariffs. Interesting times to come…

I’m a bit surprised, even disappointed.

As we sat in a St James’ pub in the spring sunshine on 3 April, one of my great chums and I reckoned Donald Trump would tease out the drama a while longer by announcing he was delaying the imposition of “Liberation Day” tariffs for a month or so. It would give a modicum of hope back to markets, and every nation the opportunity to “negotiate”, with Donald expecting a string of supplicants at his desk. That would very much back up our beer-fuelled analysis of the Orange Man-Baby of Penn Avenue’s constant need for adulation and attention.

We relaxed and enjoyed our pints. They might have been the final restful moments we will see for a long, long time. This morning’s book quote, from Douglas Adam’s incomparable Hitchhikers Guide to the Galaxy is perfect… “Oh, no, not again.”

At times like this, events tend to take on a momentum all of their own.

It is what it is. Globalisation gives way to beggar-thy-neighbour – at least as far as the USA is concerned.

Stocks dived. Gold Rallied. I have views on where the global economy goes from here – and my bet is America will be the ultimate big-time loser. I don’t buy the arguments that US corporate profitability will stem any real downside, or how positive DOGE and Tariffs will be for the deficit. I no longer accept the dogma the dollar is untouchable, or the Treasury market is unassailable. (After a whole career based around the mighty US$, my sudden lack of enthusiasm from the greenback is akin to the Pope wondering if Buddhism might have been a better idea …)

My conclusions are simple: Trump has changed the basis. His incoherent trade games are just a small part of his paradigm shifting chaos, but they will do much to weaken the US’s reputation, accelerate the end of American exceptionalism, the end of dollar hegemony, and the rise of a new post-USA global economy, by a significant factor. What comes next will likely happen harder and faster than we expect.

Time to move along… nothing more to see here… except, of course, there will be.

I got a call from an American chum last night telling me the UK should be grateful for getting hit by the basic 10% tariff. Sir Keir Starmer should understand how fortunate the UK was to be in the Great Leaders’ favour. “Thank you, sir, can I have another”. I can just imagine JD Vance calling up real politicians and demanding to know why they haven’t said thanks. Thanks for what? Making unstable economies even more wobbly.

There is something of a contradiction between Trump’s America First geopolitical, trade and economic policies, and the protectionism he has embraced. They both weaken America’s soft power and influence. I doubt any global corporates seriously contemplate building expensive US factories to cater for 340 million (largely broke) American consumers to get around the tariffs – they will wait and see how long the Trump era will last instead.

And there is the problem that roughly 80% of Americans suffer from one of the two strains of the dread Trump Derangement Syndrome, a clever disease which convinces sufferers they are ok, and its everyone else that is crazy:

• Trump Derangement Syndrome 24-A, is prevalent in Democrat areas where the symptoms manifest as the entirely rational belief that Trump is mad, bad and dangerous, and
• Trump Derangement Syndrome 24-B: infecting 34% of Americans, manifesting as the entirely irrational belief Trump is not mad, bad and dangerous…

The problem is TDS is incurable. My belief Trump is a complete numpty is not Trump Derangement Syndrome – it’s just common sense garnered from long experience.

That Trump has led American into protectionism should surprise no one. The smart money is not betting on which nations will seek to crawl back into Trump’s mercurial favour, but on what new alliances – like the new Japan, Korea, China axis that’s coming into being. The goal across Government Treasury and Business departments worldwide is finding new trade alliances to replace that which has been lost.

The only people contradicting the widely held view that 25% tariffs on all car imports will hurt everybody on both sides of the incredibly complex supply chains that enable autos, but American consumers most – are Trump’s minions. What do they know that we don’t? (Rhetorical question….)

Fair enough.

One of the things I’ve noticed in my long and inglorious career in markets is The Ripple Effect. When you drop a large rock into the pond, it sends out waves in its wake. These early waves are often uniform and predictable – much as we can say the imposition of the car-tariffs will likely result in a 0.6% negative impact on UK GDP.

Where it gets interesting is when the waves hit the sides and bounce back, producing interference patterns – which become progressively more chaotic, non-uniform, and unpredictable. These are analogous to the kind of shock-events to look out for next. They will be coming… Events tend to beget Consequences, Consequences, Consequences….

• We might see shocks hit the Tech Sector as investors start to price in what the American Mega stocks might just have lost in terms of negotiating power with Europe and elsewhere, or from the massive spending on AI infrastructure causing the private credit market to “burp” as the scale of overcapacity becomes clear.
• It might come from retail investors getting defensive and backing away from the meme-stock-esque names they favour – like Tesla and Nvidia. Institutional investors are already short.
• It will be seen in the increasing weakness in crypto – and risks such as Michael Saylors’ Strategy (once MicroStrategy) being exposed for what it is: a massively levered bet on Bitcoin rising. He is now borrowing money at 10% to buy questionable assets that have fallen 20% in 3 months. Er?
• It might be sudden moves in Treasuries as Trump tries to pressure the Fed to ease in the face of inflation, triggering bank problems.
• Or maybe US corporate profits aren’t the defence we think? Perhaps how Tesla’s miserable sales numbers (which the Musk shills have found multiple unconvincing reasons to explain except the obvious ones: competition, vision and Musk) will see a fundamental reassessment of value – I still think many US stocks remain fundamentally overvalued.
• Or maybe Iran, Russia or China call Trump’s bluff, taking the view, he’s going to be so distracted by increasing domestic economic woes, the Republican control of House and Senate breaking down as those at risk in the MidTerms start to rebel, and increasing voter pushback against Trump double dealing his policies in his meme-coins and plans to sell Truth Social

Who knows…the whole point about no-see-ums is you can’t see them to predict their consequences.

The reality is tariffs and all the noise around them just have to be factored into market expectations. What we now need to look for are the signs of how quickly that change is coming – and fathom when increasing signs of cracks and weakness across global financial assets will start to really hurt.

Ouch indeed.

Interesting times ahead.. anyone for the last few choc ices?

Out of time and back to the day job….