Liberation Day Has Come | Jack & Max on Seismic Market Revolt Against Trump Admin’s Tariff Policy (Recorded April 3 2025)
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Trump has imposed massive tariffs on the entire world, way bigger than expected. I think they are going to cause global trade to collapse and a global recession and cause markets to collapse. That is if they are implemented and maintained, which we'll see if they are. I'm joined by my friend, my business partner and host of the Other People's Money podcast, Max Weethy. Max, how are you doing?

Thanks for having me here today, Jack. I'm doing all right, certainly better than people who thought this was going to be a non-event. This turned out to be a major event. Why don't we start with the facts? Let's talk about the tariff levels and more importantly, how those levels were decided. So Max, going into this, Trump had announced that the tariffs would be reciprocal. That is, China has tariffs on the United States of 20%. We're going to raise ours to 20%. Then you realize, you actually dig into the details,

countries do not have high tariffs on the United States. There are things called non-tariff bearers, such as, oh, it takes a little longer to import things. There's environmental controls, value added tax, the Trump administration says is akin to a tariff. Many economists disagree with that. So I said, okay,

Bloomberg Economics estimated that the US would impose tariffs relative to what other countries have tariffs, plus those non-tariff measures, somewhat arbitrary. But I had measures. There was a rumor coming out it would be a 10-15-20 plan. So I put out some estimates about which countries would get a 10% tariff, which would get a 20% tariff. Trump blew the entire world, myself included, away, all economic estimates,

way, way higher than expected. China tariffs, 34%. And by the way, that's on top of the Fendable tariffs of 20% that he already implemented. So 54% tariff on China, one of the US's largest trading partners. This is huge. This is huge. It is

It's unimaginable to describe, if these are implemented, just how big of a deal they are. I think they cause global trade to collapse because countries just won't be able to make it in China. They can make it in the United States, but it takes a long time to build factories. So the pain is immediate, as I have to say many of my guests predicted, and I said so myself. The benefits are nowhere to be seen, and they are many months, if not years away.

Max, the way that these tires are calculated is incredibly arbitrary and ill-informed. And I've just got to say, stupid. They take the level of trade deficit that other countries have with the United States,

divide that by the total volume of trade. And then Trump just calls that the tariff, which is not true. Look, I try very hard to be nonpolitical. I call balls and strikes. Uh, but when there's an economic reality, that is just the opposite of what the president say. I got to call it out. It is not true. And by the way, I know, and you know, I'm friendly with the, uh, Steve Moran, uh, chair of economic advisors, uh,

For Donald Trump, you know, he's a great guy, a very smart man. But I mean, I would like to think that he would acknowledge that these are not actual tariffs, even though on Trump's chart, it said they were tariffs. So, for example, Lesotho, a very poor African country, like it's like a circle within South Africa. It is.

exports to the United States about $235 million. So that's the US's imports. The US only exports $5 million. So Lesotho's trade deficit, excuse me, tariffs, according to Trump are 99% because it's 235 million of imports divided by 240 of total volume of trade. So according to this, a country like

the United Kingdom, which despite the fact that it has a value added tax of 15% or 20%, and in some ways is unfair to the United States, they have a trade surplus with us. And so their tariff is only 10%. And actually, in my predictions, I predicted that the Argentina and Australia and Brazil would only have a 10% tariff because they had trade surpluses with the United States. And that is what those are.

By the way, India actually is also extremely unfair to the United States, extremely unfair to the entire world in terms of actually having actually high tariffs of major economies. It's one of the few countries to actually have high tariffs. China's tariffs are like 5%. I think Trump wants to reorder global trade, and he's not seeking to restore global

what tariffs and other non-tariff measures that are causing trade imbalances. He is seeking to restore the trade imbalances himself. He is going back on hundreds of years of economic thought of viewing trade as necessary and in some instances good. And the fact that trade imbalances are natural and that they're fine. Trump has said, no, we need to restore. So Trump literally wants

total trade volumes to be zero between the entire states. And he literally, not he, but in the USTR or some Trump administration website I was on, defined basically a tariff as

a country that has a trade surplus. So a country that theoretically just exports a ton, but it has zero tariffs would have high tariffs. And this is why Lesotho had a tariff of 99%. And now Trump's tariffs is 49%. So Trump said, we're doing it softly. We're doing half of what the rest of the world charges us. But again, it is not tariffs or even non-tariff measures. They're simply taking the trade balance. And this is blowing economists' minds. And the market is absolutely collapsing. Max, that is what's going on.

Tell me how you really feel, Jack. So you started to get into the intentions of the administration, which I think is important for trying to determine if and how this policy will shift over time. So when you think about why these measures were implemented and what the short, medium, long-term goals of the administration are, how do you characterize it?

I think Trump wants to build things in America and he wants to have other countries stop ripping us off. He or he he said raping and pillaging us and he is going to impose tariffs. Now, Max, I just want to share if these. So the.

The auto tariffs are effective midnight today. So they're already implemented. There's a minimum 10% tariff on the rest of the entire world that goes into effect on April 5th. So that is Monday, by the way, of course, we're recording April 3rd, the day after liberation day. And then the reciprocal tariffs, which are the ceilings, if you will, those are implemented April 9th, which I believe is, is next Friday. Now, Max,

I hope these are negotiated. Other countries make concessions. The Trump administration lowers tariffs. And I think that we could have some positive outcomes or some not horrible outcomes if those happen. But Max, look, I'm not a trade expert. I've only just looked into this a little bit. Nevertheless, I can say with confidence that if these tariffs go into place,

There's going to be a collapse in global trade, a collapse in the GDP of the United States, of China, of Europe, a collapse in financial markets, a severe re-rating of credit, a severe re-rating of equities. And I think it could be something akin to the dark ages. And

Max, if CEOs and corporate executives all around the world say, hey, this guy, President Trump, he leaves office in 2028. It takes four years to build a car factory. I'm just going to wait until, you know, a Democrat or a Republican who's, you know, not president.

intent on like destroying the global trade order and globalization is in office. And so if they don't do the good things that Trump is trying to get from, from trade, then I think it could be even worse. What do you make of this, Max? Well, in terms of intentions, uh, you know, as you said, it's not necessarily about actual trade barriers. It's about the deficit, uh, about the trade deficits that, that Trump perceives as a quote unquote ripoff. Um,

And so, you know, I think the intention is to get is to basically wield power over the rest of the world. And so when I think about what is next, obviously, as they've said, this is a negotiating tool. So the question becomes what countries, what politicians can come to the negotiating table and save face? Take China, for instance. Do you think that Xi Jinping could politically

step forward and say that this and and and try and make peace with Donald Trump right away. I don't think that that's particularly palatable for for him within the Chinese Communist Party. So the question is, if you look at these countries that are really hurt by this, who are the people that are going to be able to come and and quote unquote kiss the ring without really losing political face?

Um, the other thing is that they seriously have talked about, uh, the budget deficit. And now I'm not saying that this is going to fix the budget deficit, but they believe that they want to, to lower the deficit, but also lower taxes that, that just doesn't compute. And this has partially been done as a way to, to raise tax revenue from the rest of the world. So it can be lowered for American people. And I'm not saying that that is a possibility.

I'm just saying that is the intention here. So the idea that some of these things are going to stick because they actually believe that we are going to be able to fund the government with this, I think is a very real possibility. Not that we're going to remain at these levels, but the idea that throughout the Trump administration, there will be some sort of tariff level on the rest of the world seems highly likely to me based off of that particular stated goal of lowering taxes on Americans and

raising revenues from the rest of the world. I think that's right. Look, tariffs do generate revenue. I think we currently make about $50 billion a year. That did go up a little bit in 2016. Okay. Also, this is way bigger than 2016. This is

probably five to 10 times bigger than what's happening in 2016. So there is no corollary. And again, Trump said, oh, well, the market did really well in 2016. He did not do anything close to this in 2016. But I totally care. Tariffs generate revenue. Trump believes in tariffs ability

as a negotiating, as a geopolitical tool, as a way to generate revenue. Just by the way, I said geopolitics, so I thought of Ukraine and what's going on there. Ukraine has a trade deficit with the United States. The United States has a trade surplus with

Ukraine because Ukraine is a war zone. So they're not making a lot of stuff and sending a lot of stuff. We're sending them stuff. So according to Trump, that's good. So they only have a 10% tariff. So again, the logic behind this claim. But I think that Trump does believe in tariffs ability to generate revenue. Look,

US exports, Chinese exports to the United States, let's call it 450 billion, a 50%, 54%, 50% tariff on that. That's like $225 billion of tax revenue. Because again, tariffs are taxes. That is something. But I think China, global trade is going to collapse. And I think only a fraction of that will be captured. But no, it does generate revenue. But there are costs. In the same way, if you tax everyone at 80%,

people will still go to work and buy stuff. But actually, I think, look, people have to go to work. People have to buy food. So if you tax pasta at 80% or maybe cat food at 80%, people will still buy it. The entire world doesn't need to trade with the United States. Look, I believe, actually, I think Trump and Steve Moran's argument about the US is the best consumer in the world to other countries, that is true. But again, with a 54% tariff,

Pretty much every other country around the world is a better consumer than the United States because you just don't have to pay that much. So, yeah, I mean, Max, what do you think is going to happen with markets? I've got my own thoughts. Well, I think it is negative for markets right now. I think the most important thing is to look at who is being affected. I don't

They are having some issues with their website. As you can imagine, a lot of people are checking quotes, but one of the things I like to do is just go to Yahoo finance and look at who's moving. So, you know, the last time I looked at this, uh, the companies that were moving, uh, down 25% is five below. They're, uh,

They sell literally goods that are all $5 or less. If you can imagine, a lot of those are imported from other countries. Wayfair, I know Nike was down. Lululemon, which I was short, is down quite a bit. Those are the type of companies that the market is perceiving right now are going to be hurt the most. How rapidly that's going to be priced in and the reality...

I, I'm not an expert enough to say, but you have to be thinking about tariff winners, tariff losers. You know, a lot of people said this is going to be bad for the rest of the world. Like Alibaba, I think is actually down less than the S and P 500 is, um,

even though it's a, it's a Chinese company, but I don't think they really do that much business with the United States. I actually have a friend who, who worked for Alibaba, who, uh, was part of the New York team that their job was penetrating the U S market. And they laid them all off, uh, because that was not going very well. So, you know, they're not particularly exposed to, uh,

trade with the U S so, you know, especially, um, you know, looking at Latin America, Latin America, I didn't see any countries that had more than a 10% tariff. So what are the, the, the companies, the countries that, you know, are, are going to come out, even if they're getting a tariff that are going to be perceived as coming out a winner on this. And certainly the, um,

The Western Hemisphere seems to be lower. I mean, Canada and Mexico were notably absent from the entire tariff board that that came out, despite all of this sword rattling about Mexico and Canada leading up to this.

So I think that's important. One of the things that you brought up to me, I didn't even check it today, was the dollar and how the dollar is off. And you talked about how you think global trade is going to slow down. So can you talk to me a little bit about what that is going to do to the dollar?

Everyone knows that the global economy rests on globalization and trade. I think it's less understood is the financial system is extremely globalized as well. And when China sends us more goods, we send them dollars.

And what they do with those dollars is they recycle it into Western capital markets, primarily the United States, so that the U.S. Treasury market, U.S. credit market, high yield bonds, CLOs, private credits, the stock market. And that is kind of the bargain that has been running over the past 40 to 50 years that Trump seems extremely keen on unending. And again, I'm not making any judgment that the bargain is good or bad. I'm saying the bargain has been good for the S&P and the bargain ending is very bad for

US financial assets. So even though I think economically, the tariffs will probably hurt the rest of the world's economies more than the United States, I think they could hurt the US financial markets worse than the other financial markets because you're not getting that recycling impact. And actually, yeah, Chinese equities, despite a 54% tariff, are down way less. Like K-Web is down, the Chinese internet ETFs

is down like, as we record again, 1.3% relative to the S&P is down 3%. And the K-Web is way more volatile. So if risk adjusted terms, it's,

it's even less of a move. And also, normally when the stock market crashes, the dollar rallies like crazy. Now the dollar is selling off. This is very rare. And this is something that Julian Brig did in my interview said to me. And so Max, I really hate it when people on TV say, well, as I've been saying, well, as I've been saying, when they make a lot of predictions and 50% of them are right, and they just highlight the ones that are right. But I honestly feel like

a great percentage of shows of people on Monetary Matters, the Monetary Matters Network have been making accurate predictions. And I'm totally honest when I miss things like in the 2023 bank stuff, I got way too bullish on banks way too early. But I feel like I've been seeing the ball pretty clearly here. And I own a lot of S&P puts. And after this is recording, I may monetize them. I mean, I think we're both pretty short risk and

Again, both really long China. I may de-risk China. Again, I own a lot of Alibaba, and I may get out of it. I don't know. Again, I think Alibaba's exposure to the United States is like 7%, but there will be contagion effects. All the hedge funds that are lying on Alibaba because they saw David Tepper on CNBC, no.

no that's derisive they they also did their own work i'm sure but a lot of people didn't because of david depper um they're just going to sell sell first and ask questions later um the two names that i'm extremely long in the chinese fintech sector that are you know among the best performing stocks um in the world this year and like are up

a lot, they have zero exposure to the US, literally zero. But I also think that there's gonna be a contagion effect. So I may de-risk those. They were like a PE of two when I bought them and now they're expensive at like a PE of five or six. - Four. - Yeah, PE of four. Yeah, exactly.

I don't know. I think my message to people is be careful. I really think it depends on tariffs. Like, again, people say, well, I'm focusing on Doge. Okay, Doge actually matters a little bit. I'm focusing on energy policy. I'm focusing on the tax cuts. That's not what the long term that matters, of course.

long-term like earnings, earnings matter. And AI matter. That is not what's moving the market. Like a year ago, it was all of the AI change. People were buying all these Nvidia chips, you know, for a long time, it was the federal reserve. And, you know, I'm a beneficiary of that as someone who's show monetary matters is about the federal reserve, but it's about trade. Like I want to cover the things that is causing the markets to rally like crazy or to crash like crazy, like it is right now. And it's definitely trade. So my models, you know, my, my guiding thing into this year was, um,

Trump loves tariffs. He's been open, loving tariffs. The market doesn't believe him and they think that he wants to do a deal. They think he's bluffing and he views tariffs not as a negotiating tool, yes, but primarily as a way to raise revenue. And he is serious about this. So, Max, I think you're right that tariffs will go down.

Scott Besson, Treasury Secretary, probably from Wall Street, the most respected guy. So he seemed totally not very involved, let's put it that way, after he was interviewed on Bloomberg after he said, I don't know, I'm not really involved in these talks at all. He wanted to talk about tax policy, which he's been very involved with. And

So he asked, are you going to go to China? He said, I've got no plans. So I think maybe Wall Street maybe won't like the fact that Scott Besson, who is very well respected, has not been involved in those talks. Yeah, I just think it's really bad for financial markets. And he said that tariffs, this is the ceiling, that they will only go down. And I like to think that that's right. I think they have to go down if the global economy is not going to collapse, which I hope it doesn't.

But then Howard Ludnick, Commerce Secretary, said on Bloomberg that tariffs could go up if other countries retaliate. So we haven't even seen any retaliation from other countries. So I just I hope that the world can move on from this and, you know,

have low tariffs and have trade and not have the global economies collapse. Also, Max, I'm speaking, I'm someone who followed financial markets. A lot of people I speak to during the daytime, very involved in financial markets. We have a view. Again, there are a lot of recipients of those dollars from the rest of the world. That is why financial conditions are so easy in the United States. Julian Brigden made a brilliant point on this.

We have a view. That view is not necessarily shared by a lot of the United States, maybe a lot of people who voted for President Trump. I watch Fox News in addition to CNN and MSNBC, but I watch Fox News on YouTube. I see the comments. They love this stuff. The commenters love this stuff. So Trump's base may not be paying attention to the fact that futures were down 3.4% right after Liberation Day.

A week later, when the market's down maybe a little bit more, maybe they will. And maybe then President Trump will revolve a little bit. But look, Trump is very stern. And to use it to spin it in a positive light, something that the way that President Trump would say it, Trump is very tough. And he's very tough. That means that he necessarily will not be keen to back down.

Well, and you talk about his base because, you know, he he is, you know, distinctly a populist. So the the perception of him from his base is something that that could potentially affect policy and policy.

while equity prices might not be the number one thing that they're focused on, inflation definitely would be. We haven't really talked about whether this is an inflationary impulse or not. Obviously, weakening dollar generally is going to be inflationary here in the United States. How do you think this is in terms of inflationary impulse and the rapidity that we will see if it is going to be inflationary? Well, let's see. That's

uh, $450 billion of trade from China, 50% tariff on that $225 billion. There's three ways this happens. Max is literally only three ways. This goes number one, all those companies, let's say Apple, they sell it to the United States. They eat the tariff and their profits go way down. I don't think wall street will like that, but for the rest of the world and for most people who are not massively invested in financial assets, uh, it might not be that bad. That's scenario. Number one, uh,

I don't think companies are keen to lose that much money. Scenario two is Apple, all these companies, they raise their prices in order to offset their losses that they're paying to the US government, in which case that will be massively inflationary. I've got some estimates from some banks. I can pull them up later. But that will be massively inflationary.

I actually think option two is also unlikely in addition to option one. I think my base case is option three, which is that those companies, they raise prices and people will just not buy it. So you have a recession. Or look, I'm not confident to say...

recession, but I'm confident that if these tariffs go in place, real growth will go down. So if real growth was going to be 2.5%, now it's 1.5% or 1% or 0.5% or negative 1% or negative 2%. The Atlanta Federal Reserve has had some estimates that are extremely negative, like negative 3.7%, even before the tariffs. I think that was a lot of technical reasons like front running and gold. And interestingly, okay, there are some exemptions. There's a front running of

tariffs on gold and copper and other metals are not going to be there. Tariffs on semiconductors, tariffs on a few other items are not there yet. So I think it's unclear if Trump also wants to do sectoral tariffs, but like, look, if these are the tariffs in place and semiconductors are exempt,

It is not that bad for Nvidia at all, not that bad for TSM, Taiwan Summit, at all. It is horrible for Apple, but semiconductor companies can do fine. Let's switch to the Fed because the Fed has been saying we are in a wait and see mode, not really commenting on tariffs and how that is factoring into their inflation outlook. They're saying we're going to wait and see about the policy, and then they're going to wait and see about the data. Well, we have the policy.

So, you know, they've also said in periods of high uncertainty that they prefer to wait and see. So we have the policy that that many people believe will be inflationary. We also have high uncertainty in the effects of that policy. And if that policy is going to remain, if you were handicapping rate cuts for the rest of the year, where would you be?

I'd say that I'd actually more inclined to say rate cuts are more likely than they were last time. Even though like prices could go up, I think that they will drag down the economy more than they will like be inflationary again. Because I think people, you know, they were going to buy a car that's $40,000 and now it's $50,000. That's a huge, huge hit. And I just think they- I mean, what- Sorry, Jack, what you're talking about is stagflation. Do you-

really believe that they're going to cut into stagflation? Well, if there's a recession, yes. I mean, the Federal Reserve cut in 1974 when there's a recession. When there's a recession. It was largely believed in hindsight, largely believed to be one of the greatest policy mistakes in the Fed's history. And, you know, as we've been we have this rhetoric hasn't been talked about before. But, you know, Jerome Powell's got Arthur Burns on his wall.

True, but he's talked about how inflationary shocks from tariffs are seen as a one-time event. So it's in the central bank rule book to look through them in the same way, like the ECB, you know,

interest rates after Lehman Brothers failed, after Bear Stearns failed in 2008 because the price of oil was at $140. Central bankers everywhere now know that's a mistake and they don't want to repeat that mistake. So yes, I do think that the Federal Reserve will be inclined to be dovish. And that's what Joseph Wang said to me in early February, late January. And by the way, Joseph Wang absolutely nailed it. He said, Trump, tariffs will be good for America, but they will

It would be horrible for the stock market. He was overweight bonds and underweight stocks. I mean, look, he did overweight underweights is a Wall Street, you know, economist or, or

strategist that could be two percent overweight yeah he was making a big call he was doing way more than that and he nailed it and i literally think joseph wang's track record going back to four guys in like december 2021 on my show is when he's doing interviews with me is like 90 so look probably some luck involved there but uh gotta gotta give it to joe and joseph and he he said uh federal reserve will be inclined to be dovish and also in the minutes it was you know

released like in the Trump tariffs actually were very inflationary for washing machines, but overall they weren't that inflationary because people just didn't buy stuff and corporates ate the costs. So I mean, the real answer is I don't know, but it's going to be bad. I'm struggling to see any positive outcomes if these tariffs are implemented and maintained.

Okay. Now, Jack, you have been highlighting the people on your show who have gotten things right. I don't want you to name names, but we can maybe go through some of the things for people who were saying that this was going to be a non-event, going to be bullish. What are the arguments that you have been hearing that you think just don't check out, that you think will continue to be echoing around in the aftermath of this?

Well, I think there have been two guests this year who've had either one, a strong bullish view in one instance or another, a moderately bullish view. You know, having a non bearish view at a time when most people are bearish is, you know, by relative not that bullish. And both those guys were very, very smart. So it just goes to show like an idiot can have great calls and a really smart person can make

some wrong calls, but those arguments basically stemmed on the fact that, and actually Johnny Matthews, who was super risk off and bearish and had the correct view, he also made this point that tariffs, they actually wouldn't cause a recession because I don't have the numbers in front of me.

only a small fraction of GDP is trade. Most of the economy is services and tariffs do not, as of now, impact services. And then of those goods, a lot of those goods are produced in the United States. So imported goods are only a small fraction. So something like only 6% to 8% of GDP would be affected. But if you're tariffing 6% to 8% at 30%, you were tariffing at 3%,

That is a big change. And also, if that other 92% of the economy is impacted through confidence effects, through people being laid off, you can have a reverberation effect. So I think the bullish argument that I respected and still respect is that trade is not that big

part of GDP. Interestingly, a professor from Dartmouth, who I really want to interview, he's like a god of trade. He said on Twitter that he thinks this is actually bigger than Smoot-Hawley. And the tariff rates are bigger than Smoot-Hawley. And the amount of trade that is impacted, the trade as a percentage of GDP is higher now than under Smoot-Hawley. In Smoot-Hawley, the economies already were under a huge, huge strain.

from the cops and the stock market, but also like gold devalue. Actually, the gold devalue wasn't until 1931 or 1932. And Smoot-Hawley was, I believe, in the tail end of 1930. But I

As a monetary matters guy, I who focus on monetary matters, I do think like gold, the gold standard and gold and banking stuff was really the cause of the Great Depression, not Smoot-Hawley. But it certainly didn't help. President Trump said if we had tariffs in effect, you know, going into 1929, there wouldn't have been a Great Depression, or at least he implied that. I certainly disagree with that claim. But yeah, maybe I don't think that they...

you know, caused the Great Depression. So I'm actually, everything I say has been pretty doomery, but I will say, yeah, I don't think there will be a Great Depression-style event, because I don't think even Smoot-Hawley didn't cause the Great Depression. But I think that it exacerbated it. And I think that, you know, we don't have those same monetary issues now. Who knows? I mean, McKinley, who President Trump likes a lot, who is the man of tariffs, although, you know,

real tariff policy in the United States started after civil war. I mean, really Abraham Lincoln, he was a man of, it was the South who were the free traders. Um, and like tariffs were already at 30% in 1870s when McKinley was like my age or our age. So the tariff of 1890, uh,

the McKinley tariff of 1890 when he was in the Senate or in Congress, I think Senate, he raised them from like 37, I'm making up numbers, but 37% to 41%. So Trump already is way more McKinley than McKinley ever was. And my point was that McKinley, I think, passed the Gold Standard Act of some years. So he was responsible for putting the United States on gold standard. So there are some people in the Trump camp who want to do that, but that's not...

President Trump actually is pretty well informed on monetary issues, I have to say. But so, yeah, he would not do that. But yeah, man, I don't know. Max, I think that...

The bear case is obvious that tariffs don't go anywhere from the levels we are now. We get reciprocal tariffs or we get retaliatory tariffs, and this really escalates into something bigger. I think we can all agree that that's probably going to be very, very bad for

for risk assets. So I don't want to spend too much time talking about that case. We'll be able to follow that news as it comes. And I don't think anybody can really handicap that at this moment in time. But then there's the sort of base case and the bull case. We can come back to the base case, the middle ground as there is the most nuance there. But the bull case that you would hear from people who have been supportive of this policy that is not

that is not based off of like revitalizing, you know, American manufacturing or anything like that. I'm not talking about like the bull case socially. I'm talking about the, the bull case for, for global markets is that, you know, that at the end of this, we could potentially see a world where everybody does lower their trade barriers and the U S you know, after using this tactic, we pretty much take things back down to where they were before. I don't think that's very likely because of the, uh,

revenue aspect, but still not nearly as high as they are now. And then the net outcome years down the road from this would be that overall global trade barriers are lower across the board. Do you believe that is a possibility? Would that be bullish? Obviously, that's going to take years to play out. And yeah, I guess, do you think that's a possibility? I

I think that's a possibility. I think that's a higher possibility than I've probably let on or than I probably believe right now, to be honest, maybe I'm looking too much through, uh, negative colored glasses. And also I think, you know, and this happened to me in 2022, like when you have a contra contrarian view that works out, I think you can get overconfident. So I definitely need to not do that. And I, anyone, you know, who's like, Oh, I called this, like try not and be overconfident. I re I realized I sound very over, you know, overconfident in the beginning, but part of that's just for the show, you know? Um,

I think that is a possibility. And Max, the S&P's corporate profits from 2025 till 2055, over the next 30 years, that's what...

really matters for long-term investors. 21, 25, that's what really matters for long-term investors. If tariffs are at where they are for six months, that will be a massive drag on corporate profits in the economy. And yeah, I mean, S&P 5,000 is way too high for that scenario. But if there are long-term benefits and tariffs go back to where they were and actually other countries lower their tariffs,

then yeah, I think the long-term profitability will not be impacted. So I want to say the Warren Buffett time, the Warren Buffett line of just market panics are long-term opportunities for investors. Market panics like this, they're opportunities for long-term investors on the long side.

But if you're a trader, and there are a lot of people who are traders who think of themselves as investors, but they really are traders, I think the opportunity is not on the long side at all. Again, Trump could reverse, and I could be totally wrong about that. But that's my case. I mean, I like to think James Aitken, who also had a very negative view on stocks and credit in particular, he said that

Again, he said this when the market was way higher. He said, write down five assets that you want to own that you think are currently a little pricey. It could be a building. It could be a bond, a commodity, a stock. In my case, they're stocks. I'm not buying buildings. And think of when the market crashes, I want to buy this because I'm a long-term investor at patient capital. So yeah, patient capital will take advantage of the market turmoil that I foresee.

over the next few weeks and months. But I think it's extremely choppy waters. And the more volatile things are, the hedge funds have to de-gross because if you owned NVIDIA and it had a volatility of 15, and now it has a volatility of 60, it's like the volatility stayed the same and you 4X your position sizing. So I think there'll be massive de-grossing. And I recommend that. Look, I think...

I think there will be relief panics, but yeah, I think this is just going down. That's my base case. And if I change my view, I'll be public about that. And if I'm wrong, which I very well could be, I'll own up to that as well. But okay, long-term, Max, I do think that President Trump could achieve this. I think if, like, look, car plants, they take three to five years to build.

In World War II, you can build stuff a lot faster. I don't think if this crisis, it is a crisis, but it's not up to that level, obviously. A shoe plant, Nike, it can build a shoe factory longer than four years. There are a lot of people who say it takes four years to build a shoe plant. Not a shoe expert, but I kind of doubt that. But yeah, I mean, I think global trade is going to be reordered. And I think that

We are seeing the early innings of that. I, you know, I also go back to, I referenced the great depression, like when I credit on Stalt or some, some bank in Germany failed in 1932, 1933, someone asked John Maynard Keynes, like, has this ever happened before? And John Maynard Keynes said, yes, it was called the dark ages and it lasted for 500 years. I kind of think that I look, I don't think he was joking. This is not going to last for 500 years.

many years from now, this will just be a blip in terms of bad things. Like I don't think this will cause a long-term bear market or a long-term recession, but I mean, look, short-term, I'm not going to deny things. Like I think there probably are going to be people on television programs who, you

you know their clients are very long and they probably just track the s p and charge fees for it and they're like well look we we actually think there could be long-term positives we don't don't and say oh well we're gonna be long defensives like utilities and all this stuff and um you know basically basically say not sell but that is the advantage of like being your own trader and not working at a massive firm that's very bureaucratic of like

oh, I was 150% long. Now it can just be 150% shorter, something like that. I don't recommend that to everyone. And I also think independent media, we don't do that whole TV thing of being super biased on the long side and interviewing people who are hacks on the long side. But independent media definitely, I think, interviews people who are hacks on the short side of doom porn, of the economy is going to melt down. I'd like to think, Max, that I've

avoided that over the five years I've done financial media. And so have you, uh, and that in the, you know, the instances where I have interviewed people who were kind of doom porny, I have publicly and many times, not while they were there, but like with you and with other people said like, look, the economy is not in a recession. The people who were calling for, uh,

you know, bank panic, a commercial real estate doom, all this stuff. It hasn't happened. I had, you know, dinner last night with a CLO trader, you know, cloud was one obligation, structured credit. And he's like, yeah, the defaults are not there. So all the dooming that's gone on recession, this recession, that commercial real estate blow up, blah, blah, blah. It has not happened over the past,

uh you know for four years and really the the you know the crisis of 2022 was just interest rates going up a ton and inflation going up a ton which is bad but like we've avoided a lot of left tail scenarios that haven't happened i think that this is a left tail scenario that uh maybe could happen and

I also think that more than almost any time in history, like the fate of the global economy rests on one man, and that man's name is President Donald Trump. If he decides to lower tariffs, and again, the negative term would be back down. The positive term is, you know, be smart and be prudent. Then I think that...

a lot of negative outcomes can be avoided. And also, a lot of negative outcomes have been priced into the market. So in the same way like President Trump is injecting tons of fear and panic and uncertainty, and now it's not uncertainty, it's actual likely certainty that things will be really bad into the market, he could, of course, reverse that. And in which case, the S&P is a huge screen buy. But that doesn't seem to be my base case. Max, what are your thoughts? I've been ranting and raving.

Uh, yeah, as I said, like the middle ground is just like so hard to peg. Uh, I think, you know, this is largely political, um, for everybody. And so the question is, um, you know, the pain is going to be real for everybody. And, and like, look at Canada, for instance, like as Trump started to, uh,

you know put his eyes on canada like there was sort of a a point in time when the conservative party which was a little bit more aligned with trump was looking like they were going to like win the elections and canadian national pride and the sort of believing that you know we don't deserve this rhetoric from the united states has really flipped the polls so i do think that there is something to be said about like this is going to spur nationalism among the rest of the world um

And the question is, is nationalism going to going to overtake pragmatism and at what timescale?

And I don't really have the answer to that because it's going to be really hard for politicians around the world to come hat in hand to the United States, which is, I think, what Trump wants. And so the question is, you know, in the United States here, is real pain going to change political attitudes towards these policies and at what time frame? And the same thing in the rest of the world.

And I don't really have the answer to that, but I can see, you know, using Canada as an example, how quickly the political winds can change when you feel like you're being picked on by the biggest, richest country in the world. That's the United States. And so I'm, I'm really uncertain about that, but I do believe that, you know,

the administration wants people to come hat in hand and that is just a tough political ask for a lot of countries.

Yeah, I think that. I think you're totally right about that. Also, I think that now is probably the time when people are rushing to buy S&P puts. Like, wow, the S&P is actually down 4%. So we started recording basically at market open. It was down only 3.4%. Now it's down 3.99%. Let's call it 4%. The Chinese markets are actually up almost, they're actually, you know,

KWeb is down 86 basis points. Alibaba is actually up. Wow, that is crazy. The US imposed 54% tariffs on China, up from 20%. So the change is only 34%. And Alibaba went up. That just goes to show you that like,

a lot of foreigners are invested in the US capital markets and they're pulling their money. And also the dollar sold off. Imagine you're a Japanese investor. You're like, oh, I'm invested in a safe stock like Apple because Warren Buffett owns it. And I think fundamental basis, Apple is safe. The only dangerous thing is

overvaluation, and then now tariffs, which were not... Apple makes so much stuff in China. And it says, oh, well, don't... We've diversified into India. Well, tariffs on India are 26%. All these countries have been diversifying into Vietnam. And Vietnam, it's over 40%. I actually don't know the exact number. I think it was like 46. Yeah, 46%. So

Again, have I made myself clear? I think that if implemented and maintained, this will be a huge, huge disaster. And there is a huge yawning gap between economic reality that President Trump and the Trump administration perceives and the economic reality that the financial markets perceive. I think a lot of people in America who are not paying attention to financial markets probably do see it President Trump's way. They say, look, we haven't

you know, cheated. I remember in the 1980s when people built stuff in America and now, now we, everything built in China. It's unfair. So I think that you could see president Trump say, Hey, like a lot of America supports me. Screw these wall street guys. And you,

And let's keep the tariffs high and make America wealthy again, which was the name of yesterday's Liberation Day event. Well, Jack, why don't we leave it here? There's a lot of speculation, but I think we're going to need to wait for the facts to develop.

Let's do it. A quick shout out. People got to check out your show, Other People's Money. I did an interview with Darius Dale that came out yesterday. I also interviewed volatility legend Ben Eifert. I interviewed him last week. So actually, everything he said aged really well. He said that the tariff policy was idiotic.

and that he caused him to be extremely bearish. But when we air that, people should know that that was recorded before the tariff day. People can find you on Twitter at Max Wheatley. I'm at JackFarley96. Thanks, everyone, for listening. Stay calm out there. Stay level-headed. Until next time. Thank you. Just close this f***ing door.