This White House Trade Strategy is Destined to Flop

Yesterday’s equity session was a 1-in-10,000 event

Highlights

• The “tariffs” are looking to eliminate every country’s trade surplus with the U.S.

• Yesterday’s equity session was a 1-in-10,000 event

• A sharp rally in bond yields highlights how growth concerns trump inflation anxiety

• In a universal trade war, there are no winners

Key Takeaways

• Global Trade Shock Weighs on Markets: The stock market just marked its worst day since 2020 and the selling pressure is not abating this morning. 2020 was a global health shock but what we have on our hands today is a global trade shock. If global trade were its own country, it would be the largest economy in the world with a GDP of $33 trillion or a one-third world share. This is starting to look less like the "Roaring Twenties" (though 1929 was part of that decade that Ed Yardeni has made a theme out of) and more like the "Dirty Thirties."