{"id":73785,"date":"2025-04-09T23:11:41","date_gmt":"2025-04-10T06:11:41","guid":{"rendered":"https:\/\/drduru.com\/onetwentytwo\/?p=73785"},"modified":"2025-04-09T23:11:42","modified_gmt":"2025-04-10T06:11:42","slug":"tariff-blink-an-oversold-market-rejoices-the-market-breadth","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2025\/04\/09\/tariff-blink-an-oversold-market-rejoices-the-market-breadth\/","title":{"rendered":"A Tariff Blink, An Oversold Market Rejoices – The Market Breadth"},"content":{"rendered":"\n

Stock Market Commentary<\/strong><\/h2>\n\n\n\n

There are not enough superlatives in the dictionary to describe what happened today. We have borne witness to a multi-day, multi-week saga of economic warfare, tariff chaos, a rolling stock market crash – and now, an historic oversold bounce. President Trump has gone from tariffs, to tariff flexibility, to tariff reciprocity to a tariff blink featuring a 90-day pause on tariffs for non-retaliatory countries<\/a>. Trump left in place the 10% global tariff and punished China further moving their tariff from 104% to 125%. The market only heard pause and proceeded to rejoice. The next day or hour of reckoning, like a near complete paralysis in trade between the world’s two biggest economies, is a concern for another time.<\/p>\n\n\n\n

This episode finally completed the typical sequence of market distress: the market panics and crashes, policy makers panic next, they act, and the markets rejoice. This sequence got a false start during Monday’s rumor-inspired green shoots<\/a>. Financial markets also rely on this sequence to constrain government to act in its best interests<\/a>. The twist this time around was the delay in the policy response.<\/p>\n\n\n\n

Even though the fundamental economic uncertainty and chaos has barely changed, the market chose to latch onto this pause as a sign that the worst-case scenario is behind us. This sentiment is made all the more powerful by the growing chorus of voices from all corners of the political and business spectrum who are critiquing this tariff policy, a policy that includes fake tariff rates from other countries and incoherent formulas for calculating U.S. reciprocal tariffs<\/a>. That tailwind gives momentum to the assumption that stubborn policy makers will course correct. I am skeptical, but time will tell. <\/p>\n\n\n\n

A particularly “unusual” moment came when the President suggested on social media that it was a good time to buy<\/a>\u2014not long before announcing the tariff pause. This breadcrumb is a signpost for future stock market clues. Trump directly claimed that the tariff blink sprang from watching weakening bond markets overnight, and then watching JPMorgan Chase (JPM) CEO Jamie Dimon in the morning talking about the increasing risk of recession on Fox Business<\/a> (recall that Scott Bessent was a voice over the weekend trying to quell the recession voices). I still hold a trading position in JPM, and now I know that when I want exposure to financials, I should reach first for JPM! This signpost lets us know what and who the President MAY listen to outside of his inner circle.<\/p>\n\n\n\n

Economic Snapshot<\/strong><\/h2>\n\n\n\n

One of the dissenting voices speaking from all corners of American life, while remaining staunch Trump supporters, is Republican Senator Rand Paul (a libertarian). He claimed adamantly that international trade is a win-win and that in a free society there is no loser in trade. Paul also claimed that he has supporters in the Senate who are afraid to speak up because of politics. Most importantly, Paul pleaded for “an honest debate…we have to discuss the truth…We have to work on facts<\/a>, and it is [our] job to point out fallacies…I can’t support a fallacy that is going to make us lose our wealth.” Of course the problem for Paul and many others is that policy power currently resides with people who thoroughly reject this standard and conventional economic thinking.<\/p>\n\n\n\n

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