3 Things - What Is Happening With Tariffs, Bonds And Risk Profiles?

2025-04-10 07:30:00 ET

Summary

• On Wednesday we got a 90-day pause, and now the stock market has roared back to where it was last Thursday. I think what the stock market is saying is that it likes that Trump appears willing to reverse course on this. But we’re still implementing gigantic tariffs.
• Ignoring the market’s manic reactions, the baseline economic impact here is still very damaging at worst and significant uncertainty for 90 days at best.
• The 10-year interest rate ripped from 3.9% up to 4.5% in four trading sessions. As of this writing, it’s now back to where it was 9 trading sessions ago at 4.3%. Again, it’s all uncertainty. No one knows where inflation and the economy is going.
• Bear markets expose your fear because they expose your asset-liability mismatch. We don’t get scared because the stock market is risky. We get scared because the uncertainty across time becomes obvious.

Here are some things I think I am thinking about.

1) Pause. What. Is. Happening. With tariffs?

They say there are years where nothing happens and then weeks where years happen. Well, that’s what this last week feels like. My head is spinning. But I actually feel a strange clarity amid all the confusion. After all, I’ve been very vocally critical of the tariffs from the start, and one of my main arguments was that if they go big on this, then it could cause mass confusion, recession and panic. And we got hints of all that this week as they’ve ramped up the tariff rhetoric....

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