let's watch to see how deeply the knives cut, pins prick, fat out, air escapes
since our last discourse re what might matter, QQQ did 519 to 450, scoring minus 13+%
according to the Trump, might just be the beginning of the adjustment and he doesn't care, and
according to Bessent, who is not watching, all in the calculation
according to Lutnick, all going very extremely well
perhaps best to watch the markets bleed out before becoming buyer of last resort
bloomberg.com
Wall Street Trading Desks Stunned by Once-a-Century Tariff Shock
By Liz Capo McCormick, Carmen Reinicke, and Julien Ponthus
3 April 2025 at 06:43 GMT+8
Updated on
4 April 2025 at 04:16 GMT+8
The global trading system is being upended by Donald Trump's tariffs, causing a stock market crash and fears of economic havoc.
Summary by Bloomberg AI
The US is bearing the brunt of the selloff, with the S&P 500 suffering its worst day in five years, and the tariffs are threatening to slow growth, rekindle inflation, and wreak havoc on the global economy.
Summary by Bloomberg AI
The Federal Reserve is facing a difficult task of balancing the economy, and investors are fleeing to safety, with the dollar tumbling and Treasury yields dropping, as the market reacts to Trump's tariff announcement.
All across the world, as sell orders lit up screens on trading floors from Tokyo to London and New York, a sobering reality took hold: Donald Trump is serious about upending the global trading system — and it appears, at least for now, that fears of a stock-market crash won’t stop him.
The US bore the brunt of the selloff that raced through financial markets Thursday — with the S&P 500 suffering its worst day in five years — after Trump rolled out the highest tariffs in over a century, which are threatening to roil supply chains, slow growth and rekindle inflation.
All told, the market’s reaction amounted to a rapid, collective verdict: His push to reverse decades of globalization is almost certain to wreak havoc on the global economy.
In the US, it’s raising the stakes for Federal Reserve Chair Jerome Powell, who already faces the difficult task of balancing a slowdown in the US economy against the risk of another surge in inflation. It also comes as the Trump administration moves to slash spending and eliminate tens of thousands of federal jobs under the direction of Elon Musk’s DOGE team, fanning fears about a potential rise in unemployment.
“The tariffs are really bad for US and global growth, but it also adds to inflation risk,” said Tracy Chen, a portfolio manager at Brandywine Global Investment Management. “I don’t think the Fed can cut now with all this uncertainty.”
On Friday, Powell is set to deliver his first public remarks since Trump’s tariff announcement, which sent stunned investors around the world fleeing into havens.
US equities were the hardest hit. The S&P 500 slumped 4.8% while the tech-heavy Nasdaq 100 plummeted 5.4%, wiping out roughly $3 trillion in market value. Meanwhile, the dollar tumbled by the most in at least two decades, before paring its drop, as investors pulled cash out of the US and Treasuries rallied — sending the 10-year yield briefly below 4% for the first time since Trump was elected — as investors fled for safety.
The turmoil underscored the remarkable shift in sentiment just two months into Trump’s presidency. Traders initially bet that he would supercharge growth by cutting taxes and regulations, downplaying his tough talk on trade during the election campaign. That helped send US stocks higher late last year, fueling one of the strongest bull runs since the 1990s internet boom.
But concerns started to build last month as he started pushing up tariffs, upending global alliances, and moving to aggressively slash federal spending and the size of the workforce. The on Wednesday Trump rolled out the tariff plan that had sowed anxiety in markets for weeks, which included steep hikes on countries like China — which now faces a tariff of well above 50% on many goods — as well as the European Union, Japan and Vietnam.
Unless bilateral negotiations reduce the proposed tariffs, they will likely roil businesses’ supply chains, squeeze corporate profits and put upward pressure on consumer prices, potentially limiting the Federal Reserve’s ability to cut interest rates if the economy stalls.
‘Bigger Doom Loop’
As a result, some economists have started pushing back the timing of its next interest rate reduction, even as traders were amping up bets that the Fed will step in.
Morgan Stanley’s economists had been expecting the next move in June. But after Trump’s announcement, they predicted the Fed will remain on hold until March.
“It’s definitely more aggressive than what people were expecting,” said Brad Bechtel, head of foreign exchange at Jefferies Financial Group Inc. in New York. “It’s a bigger doom loop for the rest of the world.”
Markets had been on edge about Trump’s planned April 2 announcement for weeks, frustrating Wall Street analysts who said the uncertainty was making it difficult to position for the impact. But what they got on Wednesday was a type of worst-case scenario: aggressive moves coupled with questions about the rationale used to set the new rates and whether they will remain or be negotiated downward.
Trump and his advisers have expressed confidence that their program will ultimately rejuvenate the US economy by bring back manufacturing jobs, downplaying any short-term side effects as a temporary adjustment. Trump seemed unconcerned about the immediate reaction in financial markets, saying it will reverse when the impacts become clear.
“I think it’s going very well — it was an operation like when a patient gets operated on, and it’s a big thing,” Trump told reporters. “The markets are going to boom.”
But by threatening to drive up import prices, Trump’s trade war has already dampened consumer confidence, threatening the spending that’s a main driver of the economy. His erratic rollout has also weighed on businesses that need to decide whether to adapt or wait and see if Trump changes course, either because he strikes deals or decides the economic cost is too high.
The changes have yet to take hold of the economy, and it has been resilient enough that the Fed stopped cutting interest rates in December as inflation remained stubbornly above its target.
In the futures market, traders have stepped up bets that the Fed will cut rates several times this year, reviving the so-called Fed put — or belief that policymakers will step in with easier money policy if the stock market stumbles. They’re pricing in that it will cut its benchmark rate three times this year, with roughly even odds on a fourth quarter-point move.
That’s increasing the stakes in markets ahead of Friday’s monthly employment report, which is expected to show a modest slowdown in the pace of hiring. Later that morning, Powell is set to speak on the economic outlook at a gathering of business journalists.
“When push comes to shove, the Fed will cut and provide liquidity,” Vineer Bhansali, chief investment officer and founder of Longtail Alpha. “If markets continue to crash, they will pivot even if inflation is high.”
Yet even before Thursday’s tumble, a bevy of Wall Street firms were growing increasingly pessimistic about the near-term outlook for US stocks. As they gauged the scope of Trump’s tariffs, economists continued to dial back their forecasts to predict slower growth and higher inflation.
“What is clear and clean is that we have to fully price in the negative shock upfront,” said Ed Al-Hussainy, rates strategist at Columbia Threadneedle. “At end of the day, this is a tax — who will pay for the tax is uncertain – but I don’t think you can see this as growth positive in any way. It’s growth negative and inflation positive in the short term.” |
