Tariff Escalation Update | Jack & Max on April 7 Tariff News & Market
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The ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough. Thank you. Let's close this f***ing door.

I'm joined once again by Max Weethy of Other People's Money. Max, great to see you. How are you doing? I'm doing well, Jack. It's been a fun day. We had quite the reversal this morning. I think markets closed essentially flat depending upon which index you were looking at, but there are a lot of different things that moved us today after we opened down significantly overnight. Jack, what do you think was the biggest market mover today?

I think it's all tariffs and rumors about tariffs. So Liberation Day, Wednesday, Thursday market down 5%, Friday down 5.8%, something like that.

It was looking even more grim in late night, early morning on Sunday. The futures were down as much as I think 4.6% or 4.7%. We only closed the day down 20 basis points. So, the third day in a row, but basically down 20 basis points. It feels like it's up 5%, honestly, Max. And so, we were down a bunch in 945.10. There was a fake rumor that

Larry Kudlow, excuse me, that Kevin Hassett said that basically that we would reach deals on with 50 countries. The White House about 15 minutes later said that's totally not true. But on that false rumor, the market went up about 7% in 15 minutes. So it seems like the stock market is looking for any reason to rally. I think a lot of people have

uh you know a lot of people have fully panicked so it you know for for another crash to to happen maybe you know you need you need an update or two but um uh i i think that the market like even on the relatively negative news today uh is only down at 20 basis points and also trump said that he could pose an additional 50 tariff on china

which I think, you know, I mean, what's the difference between a 54% tariff and a 104% tariff? It kills trade kind of no matter what. But he said that he would do that only if China didn't remove the retaliatory barriers. But interesting to me, the market didn't sell off that much on that news at all. So several other tariff news we can get into. But compared to the last two trading days of Thursday and Friday, today was a

relatively calm, although it's huge, like 7% intraday swings. Well, there's one market we didn't talk about, which had a terrible day, and that was the bond market. Depending upon what you're looking at, I mean, specifically the long end of the curve, like the 30-year just got absolutely smashed. Very different than what we saw with bonds rallying during the equity market sell-off. Is there anything you can pin that to?

Well, Max, people will say that tariffs are inflationary. I've been of the Joseph Wang school. I generally think, listen to him, and it generally works out that tariffs are...

they can cause inflation a one-time price shock, but people just aren't going to buy it. So they're actually much more stagflationary, maybe even deflationary or recessionary. So since Joseph did his interview with me in late January, I mean, stocks are way down and bonds are way up, meaning yields way lower. Today, you had a reversal of that move with the 10-year rally, excuse me, sold off by 20 basis points, which is really, really very, very strange to see in

bond world. So I think it's just it could be to see rebalancing of people, their bonds are up so much, their stocks are down so, so much. Why not just do a little bit of rebalancing? That is kind of the tame interpretation. The more negative interpretation is that foreigners are just globally divesting of dollar holding stocks and bonds, and they're not really interested in a safety bid of US Treasuries anymore. Max, what were your thoughts of the bond market wrap today?

Yeah, I mean, anytime this happens, you start to see, especially when there's like US-China trade war rhetoric, it's like, oh, China is dumping US bonds. And there may be some truth to that. I don't really know. I just think most of the people who are making those comments don't know either, and it would be a somewhat irresponsible thing to say unless you have direct information suggesting that. So I don't really know. I mean, we've seen this at times like...

During COVID, bonds sold off really until the Fed stepped in. So it is part of major market volatility events to see all sorts of assets starting to sell off.

Gold was down last week with stocks up, despite its belief that it's a safe haven asset. So when correlations go to one, correlations go to one. It's just interesting that it happened on a day when it wasn't really correlations to one sort of day. It was actually sort of a mixed bag with stocks being flat. But there's maybe some of that. So I would paint it more towards just a little catch up in terms of deleveraging for the

for bonds that basically just, you know, you needed a little bit more time for that to come through. Right. And Max, people are saying the Federal Reserve is going to intervene to bail out the stock market. I think today at its lows, the stock market peaked to trough. The S&P was down a little over 20%, so officially in a bear market. I mean, NASDAQ has been, you know, definitely in a bear market.

But I don't think the Federal Reserve is going to intervene, definitely not to do an emergency rate cut because the stock market is down 20%. They might do it if high yield spreads blow out even more than they have already. But specifically, I think they do intervene in the bond market. If I recall, they got involved in March 2020, cutting interest rates to zero and getting involved in the Treasury market.

quantitative easing, not just to stimulate because the economy was collapsing in a depression, but specifically to help out and assist and the functioning of the treasury market. So that is kind of a hidden mandate. They don't talk about it that much, but that is, I think, an

an actual something that the Federal Reserve does is provide financial stability, not for the stock market unless it gets really bad, to which levels we're not at yet, but in the bond market. So if the bond market goes up 100 basis points in a week, I actually will take calls that the Federal Reserve will do something drastic to assist the market. I will seriously consider those, but now I'm not. Now, what about, obviously, you talked about the rumor of

of 50 countries sort of coming to the table. I think it is interesting to look at like who has actually come to the table. I think you had Argentina last week, Vietnam, Cambodia. They're different for different reasons. Obviously there was news about Netanyahu today coming to the table. And so if you look at those, you've got,

Cambodia and Vietnam, major exporters, extremely reliant on exports for their economy and near 50% tariff levels being imposed. So countries where it's sort of existential to their economy to try and fix these issues. And then you've got Argentina where Mile, I'm not saying he's exactly like Trump, but he's right-leaning. They've been friendly. We've got photo ops of him and Elon Musk and the sort of Doge team and his like afuera team.

So, you know, there's no like political loss for him to come to the table and try and negotiate. Likewise, you could argue with Netanyahu, there's no political loss and it is existential for them to Israel being reliant on the US for military support. So to smooth over the relationship there with the current president.

Obviously very important. On the flip side, you've got the EU, the 27 EU member states met today to vote on retaliatory measures. There was potential for some more serious retaliatory measures coming through. Got sort of a watered down package of retaliatory tariffs focused mostly on steel tariffs.

and other sort of industrial metals and cars, really where they were hit with a little bit of extra tariff. Interestingly, and I'm very pleased about this, the booze is off the table. So they didn't tariff bourbon and American whiskey in an effort to protect against what Trump said would be a 200% tariff on French and Italian wine. So I'm happy to see that we kept the booze out of it.

Yeah, Cambodia and Vietnam, those are serious exporters. Israel, obviously, is pretty close with the United States, to put it mildly. Argentina, interesting that they did a deal. I didn't see that, Max, but I take your word for it. I feel like if I was the president of Argentina, I actually would want other tariff rates to be quite high because they are operating at the minimum, again, the new floor of tariffs, 10%, which alongside the UK and Australia. So it seems like the European Union and China are...

continuing to rattle their sabers and they're not giving up. And I wonder, Max, I do think, will China back down? Because they're not at tariffs, their rates are not at 55%, but they are set to go at 54% on China on

on Wednesday at midnight and one minute. So, not too far, could be less than 24 hours from when people are listening to this. And so, tomorrow we'll see if Tuesday is deals day. If Tuesday isn't deals day, then tariff rates will be extremely, extremely high on a lot of countries in the world. In some instances, higher than they've been in close to 100 years.

And from that level, there could be negotiations. We could have a tariff rate only on for one day, but that will be the countdown will begin at which time it will begin to affect the global economy, both in terms of reordering trade flows, as well as maybe just slowing down the overall level of trade and the overall level of growth in the economy.

Yeah, I mean, with China, obviously, there is a point where the rubber sort of hits the road on real economic impact. But clearly, like, they're not going to have...

I don't think they're going to have protests in China over the government's stance on retaliatory tariffs. More likely to happen in, say, France, where you regularly see people in the streets when they're upset with government policy. So thinking into sort of the chess game, that is, who's going to come to the table? Where are we going to start to see negotiations happen?

I just – I think back to what happened with Canada and sort of the massive swing we saw from the Conservative Party sort of leading the elections there to the Liberal Party, galvanizing the country really around this sort of national pride in Canada after what they saw as a sort of –

swipe at them from the United States and from President Trump. So there's strong evidence to suggest that taking a stance against Trump, despite whether you believe that it's maybe the best thing for the economy, is pulling well with voters. Now, Canada and the EU are very different, but I do sort of...

put the voting bases in sort of similar camps of being generally more left-leaning than the United States. So when I look at the EU and I say, are

Are they likely to come to the table? I, at this point in time, I don't see it as very likely. The political win is to stay, stand your ground. And you have the ultimate boogeyman. You get to blame the United States. You get to blame Trump for this. It's not your fault until there are start to be real negative economic outcomes.

Now, how quickly that happens and how quickly people start to say, hey, we really do need to go to the negotiating table here. I mean, look how long we had the war in Ukraine going on before people started to say, I mean, you know, we got to end this thing because it's just not quite working out. It's years and years and years. And people were literally dying there. So, you know, in a case of an economic war, I would say, yeah,

you know, could probably go on longer than we expect. If real wars can go on longer than we expect, why can't an economic war go on longer than we expect? So I'm sort of a seller of deal day, deal day Tuesday. That's interesting, Max. So you're saying foreign politicians, non-U.S. politicians have an incentive to continue in the trade war and not back down because then they'll be seen by their voters as weak. I agree with you. I also think that for the Trump administration, that is...

the calculus. He's gone so far. Why not just see it through and let there be a few weeks or months of actually high tariffs rates? I think Commerce Secretary Luttnick today was asked, will tariff rates be...

Will the tariff rates actually be in place on Wednesday? They won't be back down. There are two ways. Number one, there's a deal reached before. Number two, there's a 90-day extension. I believe hedge fund manager Bill Ackman called for a 90-day extension. And Lutnick said, no, tariffs will be in there for weeks and days. So he responded in the affirmative. So I think the Trump administration is saying that these tariffs are going to be in place

And, okay, President Trump, when he speaks and when he posts on Truth Social and on Twitter, he has been resolute. I listen to the man at the top. You know, a lot of people say, oh, this party official said this, this party official. And I pay attention to them, too. But, you know, President Trump is the one in charge. And he seems quite keen on resolution.

balancing trade balances and restoring US trade deficits and current deficits with the rest of the world. He's made it quite clear, as he has for several decades, that he views trade imbalances if the US has a $300 billion trade deficit with China as

China is taking advantage of us and that is an imbalance. And look, people listening to this, they might disagree with that. They might agree with that. But I think that's secondary to the fact that the most powerful man in the world believes that. So we should pay attention. And in some instances, like look at the world through through

that view as well. I mean, President Trump, he's on True Social, he's been posting about how interest rates are down and how the price of oil is down. And I think for a lot of the country who, you know, the United States, who don't own stocks, and they drive a lot, and, you know, they're a net borrower, like, that's what they care about, interest rates going down. And

the price of oil going down. At least that's the line from the Trump administration about why they don't so much care about the stock market max.

Yeah, and actually, you know, in the same article I was reading, getting some of the breakdowns on what was happening in Europe, and, you know, forgive me if I'm ascribing too much power to this person, but, you know, outgoing German economy minister Robert Habeck said the EU should realize it was in a strong position if it was united. The stock markets are already collapsing, and the damage could be even greater. America is in a position of weakness.

So, you know, in the EU, they're saying we're in a position of weakness because our markets are collapsing over...

In the US, we're saying that they're in a position of weakness because they export more to us and we import more, which is true. I think the numbers come out to be for the EU, it's like 550 billion euros versus 350 billion euros the other way. So both sides are right. Both sides believe they have the upper hand. So it remains to be seen how it will all shake out. Now,

uh, interestingly, I want to go back to something you said, you know, trying to put out the retaliatory tariffs. Um, we threatened more retaliatory tariffs. You know, there was, uh, that, that fake story about 50 countries coming to the table. Um, it was kind of around the same time that those things came out. So maybe it just kind of got drowned out in that news and those flows coming into the market. But, uh, China didn't, you know, explode downward on that news. So, uh,

I, when the tariff measures came out, sort of had the belief, it's like, well, I don't think they can get much higher than where we are now. Clearly, we're getting more retaliatory measures from China, more retaliatory measures from the EU. So the idea that things could get worse before they get better is starting to become more realistic to me. How realistic is that to you? I think it's quite realistic. I think that...

there's a connection between the capital flows and the goods flows. So the Trump administration and Steve Moran and to some extent Scott Besant, the Treasury Secretary, they make the case that the US has the cards because we are the buyer of last resort. We buy all the goods the rest of the world has and we import way more than we export. So if we import less and we have a trade war,

will impact China and the other huge surplus countries like Germany way more than it will hurt us. I actually agree with that logic, but that's only looking at the flow of goods.

not even of services, just of goods, but not of capital. So the same way we're a huge deficit country, so we might have more power in terms of goods, we're a huge surplus. We import capital from the rest of the world. We are extremely good and extremely have experience in the US with selling financial assets to the rest of the world. And mechanically, when your current account goes down, i.e. your trade deficit or your service deficit goes down,

you'll have to have less assets, less money flowing into your capital markets. So I think that you kind of had a front running from foreigners by selling and just dumping other assets. Now, I'm hearing anecdotes from people that attest to that, but I'm really basing it on the fact that US assets are selling off

US stocks, US bonds, alongside a weakening of the US dollar. I will say, Max, when we recorded last Thursday and on Friday, the other markets were faring much, much better than the US markets. Today, the US market only down 20 basis points, again, on the S&P to end. But the Nikkei, Japan was down 8%, Germany and Europe down a little bit less than that, but sizable numbers.

And then the Hang Seng China index was down 13%, but really Chinese stocks were down about 5% on Friday in US markets, but they just didn't trade in Asia, in China because there was a holiday on Friday. So that 13% that Hang Seng was down today, it really was like Chinese stocks was down 8% today and then 5% on Friday. But yeah, the pain in financial assets has

It's gone global. It's definitely not just the US anymore. But I do think there's a counterpoint to the Moran-Bessant argument is that in the same way other countries are more vulnerable on the trade channel because they're the surplus countries, the US is more vulnerable on the financial channel because we're the capital surplus country.

Yeah. And I mean, I guess how would that play out? Is that leading back to the sort of they're selling American bonds to sort of counteract the stated goal of getting the 10-year down to term out the debt? So that would be the weapon that I guess people could use. And maybe that we will find out that that's what's happening in the bond market and it's less just like a normal deleveraging event. But in that case, I mean, couldn't.

the trade or couldn't the fed just you know say that we're just going to buy it all and we'll buy it all at this price and yeah of course that's that's an option i mean people would say that's really inflationary and the federal reserve would like to maintain a formal distinction you know as not um you know it's the fiscal agent for the us government but it's not the

buyer. It's not supposed to be funding the US government. In March in 2020, when it bought debt, it was supposedly to assist market functioning, not to be the buyer of last resort. I think there's a very likely possibility that the US

avoids some sort of capital war and we get people back to the table and other countries stop selling dollar assets. I think that's totally possible. In which case you wouldn't have to have a higher domestic percentage of assets funding the government. So that's banks, that's households and businesses, and then maybe the Federal Reserve. But I think that if the foreigners, there's a buyer strike on US assets,

which is possible i mean we've seen you know maybe three days of that happening i think that um yeah you would have to have the domestics pick it up so i think you know ideally you want that to be not be the federal reserve but anything anything is possible i'll also say that the federal reserve does not do quantitative easing when i think it's kind of a misconception when interest rates are above zero so you know quantitative easing was kind of like invented in the

late 1990s and implemented first in Japan with the goal of increasing the money supply. When Bernanke brought it to the United States, it basically did the same thing, expanding the central bank balance sheet, so printing bank reserves to buy assets. But the goal was not of expanding the money supply because it was kind of revealed that that had limited effects, but of actually lowering long-term yields. And if interest rates are 3%, the overnight rate that the

controls, there's no need to do quantitative easing. You just cut interest rates. Quantitative easing is only something the Federal Reserve does when its interest rates are already at zero. That being said, I think it could have some programs to assist with market functioning. That is definitely on the table. But in terms of quantitative easing as the long-term purchase of

securities buying and holding um i don't think that's on the table until interest rates are at zero which is certainly not my base case and you know not the base case of most people okay yeah it would be ironic if the bond vigilantes turned out to be foreigners the whole time um

But that is something, as you said, you called it like a capital strike on U.S. assets. And I think that when we, you know, turning focus maybe to like longer term outlook as we come out of this, that is something that I am interested in. I mean, the strength of the U.S. economy over the rest of the world, you could argue, has been driven by inflation.

the US consumer and the US consumer specifically the top 10% of wealth. And that has been driven by the performance of US assets.

And U.S. assets have been driven by the ex-U.S. dollar coming back and buying our assets, the share of foreigners who own U.S. assets, the percentage of U.S. stocks in the MSCI world index just growing and growing and growing. And the big question everybody wants to say, when is it time to buy the dip?

And I think certainly, I don't know how long this dip is going to go. I don't know where it's going to stop, but there will be a moment to buy assets. And my big question is, are those assets going to be U.S. assets? Certainly, I think some of them should be U.S. assets, some portion of them, but

Should it be entirely U.S. assets if you're a long-term investor? Or will we look back at this as sort of the final moment of this, you know, U.S. is the only game in town? Because if you are a country that is looking at how are we going to support, you know, maybe more domestic consumption if we're going to be doing less exporting, well, that domestic consumption has been supported by the wealthy.

And maybe if you're a European country, you should be bidding up your own stocks and not our stocks so that you can make your citizens richer and support domestic consumption. I think, Max, that one reason the US assets has outperformed over the past, let's say, 15 years, basically since after 2008, is because of the dollar reserve status and increasing

current account deficit, so you have to have a capital surplus. I think that is a factor. But I think the big factor is still that US companies are just more profitable than European companies and Chinese companies and are perceived to have a greater rule of law.

the government is not just going to take $20 billion from some US company, whereas in other countries, that's not unheard of. I still think that that premium exists. And I also will say that, to take a phrase from James Aiken, that for patient capital, I do think there are lots of bargains on the table right now in US stocks, in European stocks, and Chinese stocks. I mean, I think to some extent, unless you're at the top of a bubble, really, I mean, there are always stocks that

offer good value, that will be to our own listeners to determine that value. In terms of trading, I think it is still a very dangerous market. I'm certainly for a trader and even as a market commentator, I'm definitely not going to be calling a bottom.

I think that calling a bottom is a dangerous business as people have learned over the past few days. So Jack, let's turn back to the short term. What do you think about market positioning as we head into these big news days of Tuesday being potential for deal day and Wednesday potentially being tariff day? Well, I think just looking at the stock market itself, just reading the tape, I think there are a lot of people who

have sold their positions and are looking to get back in. And a lot of people who have monetized, to some extent, the hedges that they had. So they have hedges generate a lot of cash and now they have surplus cash. I'm just looking at the fact that you had a total lie, a total rumor, like move the stock market 7% in 15 minutes. This is not my thought, but I think his name is Alex Good. Great, great poster on Twitter. He said, imagine how much the market will rally

on a real trade deal, not a fake trade deal. If it rallied 7% on a fake trade deal, imagine how much it's going to rally on a real trade deal. I think eventually there will be a trade deal. So I think we are a little bit over, I'd say oversold. I mean, people have been saying it's oversold for a while and it kept going down. And there's the old saying that, you know, markets crash from oversold positions. But I think that it's gone down three days in a row. And also just looking at

the March 2020 panic and sell off, you had huge, huge one day reversals. And we haven't had any of that yet. Like it's very rare that every day, Monday through Friday, it goes down 3%. Normally it's down 5% on Monday,

up 7% on Tuesday, down 8% on Wednesday, that kind of thing. So I think I would be surprised if this is a true bear market panic, they're almost guaranteed to be epic one-day reversals where they'll suck the bulls back in and then we'll go back down. I'm not a volatility specialist at all. I actually

did do some trades on the VIX, which worked out, most of which I monetized today. But the actual VIX, you look it up, it's like, oh, it's 48, it's 48. That's not tradable. You can buy options that have a 30-day expiration that have a volatility close to that. But really, it's all about VIX futures. And the VIX futures is only at 32. And I believe that the VIX future expires later.

later this month. So the actual, like the real VIX is super high and the VIX futures, the highest trading VIX futures is 32. So if volatility stays this high, like I think at some point those VIX futures have got to go up, but also, you know,

for how long can the market continue to have these epic 5% down, 4% down? Or today, only 20 basis points down, but again, intraday, the volatility was big. But I'm not a volatility specialist, so I know that anytime I'm trading volatility, I'm paying tuition to volatility specialists, some of which have been on this program. And I think unless people watching are also a volatility specialist, they should be aware of that fact as well.

I think the bond market is interesting. Max, you managed to convince me to get a little bit into bonds today when it was down. I think that if these tariffs are going to affect and if they are going to be stagflationary and slow down growth,

I could see bonds catching a bid, but that's a low conviction view. I have been following the administration's stated goals. And I find it hard to believe that if the President of the United States wants to get the 10-year

below 4%, meaningfully below 4%, that he can't manufacture a way to do that. It's not often that the president of the United States gives you a price target for an asset. So if I get that, I tend to

to try and trade that. So yeah, I think the equity market is for me in the too hard pile right now. Um, so fortunate enough to have come into this event with like some bearish exposure and believing that it was going to be negative and, and,

traded it well and luckily throughout this period and pretty much done with that for now and moved on to the bond market, which as I said, they gave you a price target. How often do you get that from the administration that has the keys to the treasury?

So I think that that's a pretty interesting setup given everything that we've seen here. If you really believe that today was just like a catch-up deleveraging event versus we're in some sort of like capital war where China's going to be selling bonds to sort of like try and prevent the administration from achieving its goals of terming out the debt. So that remains to be seen.

Also, Max, I'll say Scott Besant, he wants to term out the debt, the Treasury Secretary

That's why he wants lower interest rates. Donald Trump, he said he loves low interest rates because it helps with the mortgages. I don't know if he has specifically said, we're going to term out the debt. I think that is a goal of the Treasury Secretary who has a lot of power. But the goal of President Trump's getting interest rates, I think it's because he realizes that that makes people happy because they can borrow money to buy a house at a cheaper rate.

Yes, you are right. I guess I should say that the reasoning given by, by president Trump has not been as specific as Besson, but also in, in talking about the administration's like stated goals. So I think that part of the, uh,

uh, whipsaw that we are going to see is they're going to announce deals. One word, they're going to say, we have a deal with this country and the terms of that deal in the same way. They said, we're going to announce retaliatory tariffs. And then everybody was surprised at the nature of those at the magnitude of this tariffs, how it was calculated. So we're going to get these sort of like deal rallies. And then the actual terms of the deal are going to come out. And, you

He is a tariff believer. He really does believe in tariffs. He wants to fund the government with tariffs to some degree. And so you're going to get rallies on deals, and then who knows what the actual tariff levels are going to be, what the deals are going to look like. So-

So as we saw today, it doesn't really matter. The market is going to rally, but it also means that there's going to be opportunity for the market to be disappointed in the same way we all were sort of at the announcement of what was coming for Liberation Day. So I think that that is something that people should be aware of is that, yeah, we are definitely going to rip on deals, but who knows what those deals are going to look like.

Yes, I think the quality of the deals could be a little bit lacking, but I think there will be announced deals. I agree. I think if they're already on sales, it kind of has to be tomorrow. So Tuesday, I mean, there could be deals after the tariffs are in place, but the tariffs go in place at 12:01 a.m.

Wednesday, April 19th, Eastern Time. So Max, the equity is in the too hard pile. I like your use of the too hard pile. Maybe they're in the too hard pile for me, but I have let go of about half of my puts, my equity puts in number. In terms of dollar value, they're probably more. But I think that I still am a little bit worried about headline risk on Wednesday if these tariffs actually go into place, just because

This will be a big deal if China has a 54% tariff or even a 104% tariff. I actually, there's something I just learned from someone I just spoke to, I won't name a name, that may be slightly less worried. That is, if China has a 104% tariff, they can just do

They can just export to the UK, which has a 10% tariff or Argentina or another 10% surplus country, the country that has a trade deficit with the US, that US has a trade surplus with them and basically get around tariffs. And President Trump and other folks might call that cheating. And I think President Trump was not happy when China did that with Mexico and to a lesser extent, Vietnam.

But I think that that could be a world in which China has 100% tariffs, in which goods still manage to make it from China to the United States. And you could say, okay, that is kind of contrary to President Trump's mission and the mission of reordering global trade. But I think that is technically a world in which I see where global trade could still continue to function with nominally extremely high tariffs on goods.

on China. So I'm open to that possibility. But yeah, Max, now I'm going to just say a cap. First of all, people should not listen to really what people say, what I say. People should do their own analysis, of course, but especially this caveat, I'm just throwing out a scenario. But I think the market rallies on deals on Tuesday, tomorrow, and then

the tariffs are implemented and then it's a return to volatility. That scenario wouldn't surprise me. I don't really have a base case, but I just think I'm preparing for the worst, but I'm also prepared for the best. I think there could be a deal announced. I can't get back to Max.

the president of the United States has been so extremely clear. And on some issue that President Trump does not pay much attention to, the technocrats, the experts might be able to sway and get in the technocratic answer. But trade and terror specifically has been a hallmark of President Trump's policy and ethos for 40 years. So I think that he means business. Yeah. And to go back to what you said about

trade sort of flowing through other countries first. It's something that already happens. But it reminds me of like the Russian oil embargo. All that oil still made its way to the refiners and to the market. So, you know, as to quote Jurassic Park, life finds a way. And I think life will find a way here. But

you know, extending supply chains, having things flow through other countries first and then come through. Like, that doesn't sound deflationary to me. That sounds inflationary. And so I'm still not sure what we're going to get, what is going to be the impulse here, whether it's going to be deflationary or inflationary. I think it's certainly going to slow trade. And, you know, generally that is not good for growth. So, yeah.

huh remains to be seen yeah i mean a one-time price adjustment in the time of the one-time price adjustment whether it's a 10 price hike or a 50 price hike um i mean it will be lesser than that because companies can absorb eat some of the cost but that one-time price hike will sure seem like inflation um but the central bank of the federal reserve will see through it and

I think that, you know, but the prices will go up. So to people going to the store, it will definitely seem like inflation. And it only won't be inflationary if they then stop buying things because the price is so high. So it kind of will seem like

you know, an oil shock in 2022 or 2008. 2008 was a total banking thing, but I'm just talking about the price of oil shock. And actually, Brad Setzer, who I interviewed, trade and balance of payments experts, he said that the 50% tariff on China is just shy of a $100 increase in the price of oil. So oil goes up

from $60 to $160. Now, gas could still be cheap because the US is still a huge producer. And President Trump is happy that the price of gas and oil has gone down. But just to give a sense of the scale of the supply shock. And then Brad Setzer said, if the tariffs go from 54% to 104%, it would be even more than $100 a barrel. But Max, I also just want to leave

the audience with something that I actually think that you and I know something about. Because look, markets, we're guessing whether it's you or I on the street or the chief strategist from Goldman Sachs, everyone's guessing. No one really knows. But one thing that I actually, and I'm curious if you agree with me, is that just in terms of the news cycle and the vibe and the panic,

The times when you read the headlines about the market crash will be pretty close to the bottom. I think that the time to kind of panic was like a week ago or a month ago. And I think that while I still think declines are possible and likely, I would also

warn people about being too bearish and specifically about reacting emotionally. If like, let's say in two weeks, the stock market is down 10% from here, that could be the bottom, but that will be the time when people buy puts with implied volatility of 80 on a market that's just going to have a huge rebound. So I just

put people, you know, urge a little bit of caution, both on the bullish side as well on the bearish side, because look, you know, I admit, Max, I was a little bit panicked. You and I were both a little panicked on Thursday, but we had a pretty, you know, quite a bearish view. And a lot of our audience said that I was kind of

chicken little and being a little bit too emotional and uh I think I do take that criticism to to heart um you know I mean the S P is down like seven or eight percent from from there so hopefully some people maybe um you know used used a little scoreboard yeah yeah a little bit of a scoreboard but I'd say um you know I've got I've got no freaking idea and no one else does either we just got lucky

Yeah. I mean, and to say like the time to panic has passed. So I got a text from a loved one. Should I sell my stocks? I wanted them to go back up to XYZ level and they keep tanking. And I said, you are a few days late to panic sell. And then I replied by also saying that doesn't mean selling isn't a good call, but it should be based on a longer term view, which I can't exactly formulate at the moment.

So, uh, we both agree. I had a real world example of that, of somebody panicking, uh, three or four days too late, uh, really to panic and not being able to provide them with the clarity that they're looking for. Um, so yeah, it, it always helps if you're going to panic to, uh, to panic first, just to echo your sentiment. I think it's worth talking about like why we're doing this. We, we generally have reserved these sorts of things for like major market days, um,

big data points where we know everybody's kind of watching, whether it's an inflation print, a jobs number after the Fed has specifically said that they've started to be watching, turning the labor market. We know that everyone is watching this jobs print and we are too. And so we'll have a special episode to sort of break that down and what we think Fed policy is going to be. Big Fed days, we've done that. So this is something that we are trying to do when...

either markets are moving fast and the typical book a guest, record an interview, have them talk about it. It works really, really well for long-term views, which ultimately is what we think is the most important thing for people to stay focused on in markets and economics. But at times like this, it really just

isn't an effective way to get real-time information to the viewers and to the audience. So we're stepping in to do a little bit more of these one-on-one discussions with each other for that reason, not because we think we are the experts that you should be listening to. There's plenty of people that we wish we could

book and record and interview fast enough for you all, but it just isn't a reality. And also, people tend to cancel around these times, whether it's because they're busy dealing with trading, dealing with clients. Sometimes you come out, you make a call, and you're wrong, and you want to just hide under a rock for a week.

and hopefully people forget about those sorts of things. So this whole process when markets get like this can be a little crazy for us on the media side. And we're just trying to keep you guys up to date as best we can with the resources we have. And unfortunately, that's just the two of us.

Yeah, that's all you got today. But tomorrow, you're going to be getting the great analysis of the quantitative macro investor and analyst Tian Yang of Variant Perception. He had a slightly different take. He thinks that

it'll kind of be like Reagan 2.0. The Trump things, there will be some pain, but there will be a light at the end of the tunnel. So people should check out that interview and then got a lot more guests booked for later this week and the next two weeks.

Yeah, and on Wednesday, we're doing a little bit of a flip just because markets are moving faster. Other people's money is more of an evergreen show because we're talking a bit more about the fund management industry. I didn't plan this, but we've got Wayne Himmelsine of Logica Capital coming out. It's going to go on Wednesday instead of Tuesday, and that is great because he is a long volatility investor.

I mean, they're starting to do, which is, this is also a mega trend, the idea of taking alternative strategies like long volatility and pairing them with equity. I mean, that's something that Cliff Asness just wrote about. There's plenty of other managers, Corey Hofstein and sort of the return stacking model that he has come up with. So this idea of pairing equity

alternative strategies with equity beta is very real. So it's something they do, but chiefly they are long volatility. And we talk a lot about how they saw a huge growth and interest in their business sort of like post 2020. And then 2022 came around and markets sold off, but it wasn't a volatility event. Volatility kind of stayed in line compared to 2020. And so you had

all of this hot money rushing in, then you get the market sell-off in 2022 and long volatility strategies didn't quite provide the protection that they did in these sort of more rapid sell-offs like we're seeing now and in COVID. But

It's just very timely given everything that's going on, talking about what it's like to raise money for these strategies that you kind of need to be in them. As we said, the time to panic was months ago. So we talk about that and the idea that sort of how long it takes to build up trust with investors and to get them to understand where these types of strategies fit in the portfolio. So very timely and excited for that one. Yes. And should we leave it there, Max?

Yeah, let's leave it there, Jack. Lots of fun. We'll do it again soon. As we said, this is something we're doing a little bit more over the next couple of weeks. And hopefully for all of our sake, we can get back to more regular publishing eventually and more orderly markets. Yeah. If we do this on Tuesday or Wednesday, you know the market is having a tough, tough time. All right. Until next time. Thanks again, everyone. Talk soon, Max. Thank you. Just close this door.