One of the main reasons I place so much stress on the markets is their proven power over our TV president. Donald Trump has long addled himself with terminal CNBC and Fox Business brain during his time as an aspiring Manhattan socialite and business tycoon, and in his political era, has added Fox News and CNN to his toxic cocktail of cable news brain poisoning. When Trump first announced tariffs back at the start of February, markets plunged and entered what we in the biz call “uh-oh zones” before Trump said that Mexico bailed him out by agreeing to a one-month delay in the trade war, and markets instantly reversed upwards.
From its low on February 3rd, the first time the markets made Trump blink, the S&P 500 rose a little less than four percent. After today’s close down a little under two percent, it’s down just under seven percent from the top on February 19th. The Nasdaq closed down just short of three percent and has now erased all of its post-election gains, while the mighty Dow Jones is less than two percent away from following suit. Things are already bad, but today, something changed, and now the market looks even worse than it did a week ago.
Trump also threatened to back down from his trade war last week. After plunging the markets into chaos by announcing his March tariffs would go into effect as scheduled, he opened some room to walk some of them back the next day, and the S&P 500 bounced nearly as hard as it fell the day before. It then plunged again as people began to read the fine print on these “delays,” as the New York Times reported yesterday when U.S. automakers told Trump his tariffs would wipe out their entire 2025 profits. These “delays” are not all that they seem, as some products are temporarily exempted while others are not, all in total disregard for how integrated the North American economy is, especially when it comes to auto parts. Trump is now demanding that during this short reprieve, the largest automakers in the world shove a decade’s worth of capital expenditures, and thus long-term debt to potentially radically change these companies’ debt to equity ratios, into a month. This month. Or else.
As markets wobbled on a downward angle the past week, Trump and his cronies dropped more hints that these tariffs on Canada and Mexico would be delayed again, and in the morning, Trump formally announced that the 25 percent tariff on most goods from Mexico will be postponed. He did not initially include anything for Canada, but their exemptions did arrive in the afternoon, and putting these two events on the intraday chart for the S&P 500 is instructive to how the market digested Trump’s North American trade war plans today.
The market isn’t just not taking Trump’s word for it like it did before, the market actively faded his announcement on the Mexico delays–making Trump sound like a jilted lover in saying “I’m not even looking at the stock market,” even though you could pinpoint the nanosecond on the chart a month ago where Trump delayed the tariffs for the first time. That didn’t happen today, and the weak bounce that got sold off after the Canadian exemptions were announced before the market closed is very telling as to how much people are literally buying Trump’s bullshit right now.
A big part of the dynamic pushing the market down are the jitters over the expected horrendous jobs report coming tomorrow, which will be a harbinger of doom for the nuclear explosion sitting in the April one thanks to Elon Musk. The market simply just does not have the confidence it did a month ago when Trump told it everything was going to be alright, and you can mathematically measure how hearing it again is creating diminishing returns for team Trump. Another aspect of the market’s skepticism is that additional tariffs are still scheduled to go into effect next month. Trump can do all he wants in the moment to put lipstick on this pig, but we are firmly on tracks that he and Musk are pushing the economy down, and today is evidence that their empty-handed and empty-headed assurances are being met with increasing skepticism.
Treasury bond yields, also known as the price of money and the mathematical basis underpinning what everything on this planet is worth, have been flying around wildly during the day lately, which is the kind of volatility a $23 trillion debt-based market does not need (RSI, a simple measure of volatility, has both hit the top and broken through the bottom of the normal range in the last four-plus months for 5-year Treasuries and below). That big movement lasting for long enough on its own can break something in markets eventually, independent of whether anything else closes up or down. Trump’s trade war and Elon Musk’s destruction of the country’s largest employer has rung the market like a bell, and we are watching its endless reverberations unfold before our very eyes, and the majority of them trend toward recession.
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