What’s happening right now?

Considering the magnitude of what is happening in the US and how that is rippling around the world, I felt like it might be useful to do a daily check-in to just note what has happened and what things appear to be moving at any given time.

> What’s the goal?  Hard to say. Trump has failed to provide a coherent overview of his own plan, and seems to have (to some degree) lost control of the plan’s narrative as political surrogates are left to defend the plan against the growing opposition to the move and the global financial chaos it has created. The stock market crash has so far not prompted the Fed to lower rates, nor has it caused long-term bond yields to fall, so we can’t tell yet if this is all a part of a plan to refinance US debt at a lower rate, or if it’s simply a manifestation of madness and power. 

> The DOW is all over the place:  The US markets have been lurching dramatically during each trading day. On Tuesday, the DOW actually pumped up almost 500 points on rumors that the US would grant a 90-day pause on the implementation of Trump’s tariffs, only to lose all that (and then some more) when it was revealed to be “fake news”. On Wednesday, the DOW dropped almost 800 points on news that the White House had confirmed its plan to impose an additional 34% tariff on imports from China, raising the total tariff on Chinese goods to 104%. Those tariffs went into effect. Then China announced retaliatory tariffs. These are intraday swings that I do not remember witnessing in my life as a trader. These are not normal times. The DOW is up 150 points this morning as I write this.

> Commodities:  Gold seems to have leveled off around the $2,980-$3,020/ounce range, down from the $3,150 highs we saw before the tariff announcements. Oil has dropped significantly and continues to drop as of this writing. A barrel of oil was $71 before the announcement; it was $56 yesterday, and it’s $57 today.

> Currency:  The big news in the FX markets on Wednesday was People’s Bank of China (PBOC) and its move to “send a signal” to the US through the strategic devaluing of the yuan below a long-held range. A weaker yuan would make Chinese products cheaper in foreign currencies, and potentially offset some of the Trump tariff’s impact on the value of Chinese goods relative to those made in the US. If China devalues the yuan (as it did during Trump’s 1st term) and allows some degree of capital flight from China, we could see wealthy Chinese race to acquire foreign currencies and assets, like back in 2015. That event was very positive for Bitcoin’s price.

> Bitcoin and friends:  After chilling at over $100,000 per BTC in late January, BTC is now at around $77,000 and still showing weakness, dropping almost $10,000 over the course of the tariff period alone. Whatever is happening to BTC is nothing compared to the implosion facing ETH hodlers, with prices down more than 56% YTD and down over 20% during the tariff period. At least FARTCOIN holders are happy.   

 

MB bottom-line: This is Exhibit #1 in the “Voting Matters” debate. It’s not controversial to say that Kamala Harris would not have caused this to happen, as whatever is happening here is 100% on Trump’s account. That said, I think the uncomfortable truth is that Harris probably wouldn’t have done anything to adjust the long-term trajectory of any of the problems that have caused the US electorate to support the Trump administration to commit these financial atrocities. But that’s all in the past. Looking forward, it’s hard to imagine putting any of this toothpaste back in the tube. I get the impression that things have changed dramatically in ways that we might not feel for months or even years, but that once we feel them, we might think it a little bit overwhelming to consider the severity of the changes that have occurred in such a (relatively) short time. I don’t see this attitude reflected back at me by my friends, colleagues, or family, so I’m doing my best to avoid smashing the panic button. But I can’t ignore that I smell smoke, and I feel like the only way for me to remain “in the arena” is to search for the source of the smoke and watch that process like a hawk. So that’s what I’m going to do!

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