3,900.28 Points in Two Days
If this is American greatest, I prefer it when things were "going to hell."

I honestly am not obsessed with the DJIA, nor do I think it is some magical indicator of the health of the economy. But, it’s not nothing, either. I keep bringing it up because it is an obvious indicator of Trump’s tariff policies. It matters not just to highly invested members of the business class, but also to a lot of otherwise “regular” people who have investments for things like retirement or to educate their kids.
It’s not for nothing that we think about the market crash of 1929 as a key indicator for the start of the Great Depression. We know the market tumbled as a result of the financial crisis that led to the Great Recession of earlier in this century. Precipitous stock market declines get names like Black Monday.
The thing about all of those previous events is that they were the culmination of any number of external factors, not because of a very specific, very conscious policy. Moreover, it is a policy choice that anyone with an ounce of understanding could have seen coming.
Further, this situation is one in which I truly do blame Congressional Democrats for not specifically curtailing the president’s tariff powers in the 2021-2022 period. While I get a little frustrated by blaming the Democrats for the very bad acts of a Republican president and Congress, I think that if you know an arsonist might be coming to your house for a visit that it is advisable to make sure the matches and accelerants are safely stowed and not feel accessible.
I will add to this assigning of blame that the current Congress, controlled by the allegedly pro-business Republicans, should be telling themselves that their president has gone too far and that it is time to take his toys away.
We aren’t currently experiencing any result of the business cycle, the broader global economy failing, a pandemic, or paying the price for some culmination of bad decisions. We are suffering this situation because of a man who thinks that tariff “is the most beautiful word to me in the dictionary” and that the model of American greatness is to be found in the late 19th century.
The whole situation is painfully stupid.
It is not good history.
It is not good politics.
It is not good economics.
It is blindingly, excruciatingly stupid.
And the sycophants around him are all onboard. For example, via the Daily Beast, JD Vance Says He’s ‘Feeling Good’ About Market Mayhem: ‘It Could Be Worse’.
“We’re feeling good. Look, I frankly thought in some ways it could be worse in the markets because this is a big transition,” Vance said on Newsmax’s Rob Schmitt Tonight Thursday.
“You saw the president said earlier today, it’s like a patient who was very sick. We did the operation, and now it’s time to make the patient better. And that’s exactly what we’re doing,” Vance added.
He was referencing a Truth Social post from President Trump that said the economy is in a post-surgery phase, and metaphorical convalescence will lead to a more healthy outcome down the line.
“THE OPERATION IS OVER! THE PATIENT LIVED, AND IS HEALING. THE PROGNOSIS IS THAT THE PATIENT WILL BE FAR STRONGER, BIGGER, BETTER, AND MORE RESILIENT THAN EVER BEFORE. MAKE AMERICA GREAT AGAIN!!!” Trump wrote on his social media platform.
It strikes me that Elon Musk, who has more money than he could ever spend, had a sad and got mad because Tim Walz made fun of his stock dipping. But is it okay if millions of run-of-the-mill people see their retirement account evaporate? Is it okay if tens of thousands lose their jobs in the coming recession that is being created by choice?
And then there is this lunacy.
First, I suspect that most companies are going to wait to make massive investments. They don’t know what is coming next. There is this thing called “uncertainty.” Perhaps you have heard of it? One suspects a lot of people and companies and calculating (or hoping) that either this is a short-term bluff, or that someone will intervene. At a bare minimum, a lot of investors will try and ride this out until the next administration. It isn’t like the day after “Liberation Day,” companies started making plans to break ground on new plants.
Second, even if they all start today, it is going to take a hell of a lot longer to restore manufacturing to the US than two years. This is especially true given that some numbskull just made construction materials more expensive. (A reminder that tariffs will make domestic products more expensive as well, not to mention all of this could spark general inflation).
Third, the rest of the world remains part of global economy and doing business out there may be more agreeable to many companies than expending the funds needed to do business just here inside the Trump Tariff bubble.
Beyond the weird fantasies and the William McKinley fan fic, I am beyond astounded at how they came up with these tariffs.
Via The Verge: Trump’s new tariff math looks a lot like ChatGPT’s.
Economist James Surowiecki quickly reverse-engineered a possible explanation for the tariff pricing. He found you could recreate each of the White House’s numbers by simply taking a given country’s trade deficit with the US and dividing it by their total exports to the US. Halve that number, and you get a ready-to-use “discounted reciprocal tariff.” The White House objected to this claim and published the formula it says that it used, but as Politico points out, the formula looks like a dressed-up version of Surowiecki’s method.
[…]
A number of X users have realized that if you ask ChatGPT, Gemini, Claude, or Grok for an “easy” way to solve trade deficits and put the US on “an even playing field”, they’ll give you a version of this “deficit divided by exports” formula with remarkable consistency. The Vergetested this with the phrasing used in those posts, as well as a question based more closely on the government’s language, asking chatbots for “an easy way for the US to calculate tariffs that should be imposed on other countries to balance bilateral trade deficits between the US and each of its trading partners, with the goal of driving bilateral trade deficits to zero.” All four platforms gave us the same fundamental suggestion.
And yes, Kush Desai is the deputy White House Press Secretary, and I can find no reason to assume that the X account quoted isn’t real. I say that one because what he is admitting is so mind-bogglingly stupid that my first reaction was to assume it was a parody account.
To reference again Kingdaddy’s post from the other day, this smacks of Elon Musk and his techbro obsession with AI. But I am also reminded of another tech term I learned decades ago: GIGO.
See also, Futurism: Trump Tariffs Show Signs of Being Written by AI.
“Confirmed, ChatGPT…” Journal of Public Economics editor Wojtek Kopczuk tweeted. “Exactly what the dumbest kid in the class would do, without edits.”
We are being governed by fools and idiots. That is not a partisan assessment. That is as hard a political science observation as I have made in my entire career.
And, by the way, speaking of the Great Depression.
A reminder that probably the single biggest reason that Trump won was the economy and the simplistic (indeed, foolish) hope of many voters that he could bring down prices to their pre-COVID levels.
And by the way, if this had happend in the first couple of months of the Harris administration Trump and the rest of the right would be screaming bloody murder. That may be a hackneyed, cliched observation at this point, but it is true nevertheless.
There is a long list of small items that the last Dem congressional majority could have dealt with and didn’t, beyond tariffs, DACA, a DACA kid was deported yesterday, the Insurrection Act and a few more. There were gettable Senate R’s to avoid the filibuster. Yes they would have needed give something to get those votes, but they kept believing there was a bigger, better bill within their grasp, that was always a mirage.
Manufacturing isn’t going to reshore simply because of tariffs, for many products, it will still be cheaper to make them in Asia, despite the tariff. But the biggest reason is, no one believes the tariffs are forever, the felon already is talking about deals and even if he were to stay in office beyond 2028, he’s 78 and fat, so no guarantee that tariff will continue.
Imagine you have a billion dollars to invest. You can put that money in China, whose corrupt government has deliberately alienated foreign investors while adopting a belligerent foreign policy that may ignite a war; or the US, whose corrupt and capricious government has deliberately started an idiotic trade war and adopted an inexplicable foreign policy that may ignite a war; or Europe, where normalcy reigns.
You’re young Sergei Brin and you have this idea for a search engine. China, the US, or Europe? You’re a brilliant medical researcher. China, the US or Europe? You’re an inventor with an idea for a product the whole world will love. China, the US or Europe? You’re working on a cool new missile. You’re a young couple looking to make a family. You’re a tourist looking for warm beaches and a fascinating culture.
For a long time the US had various advantages, above all a huge consumer base. . . that you can longer sell to because of tariffs. There is now literally nothing attractive about the US. We are despised by every country on earth. And we richly deserve that contempt.
Our economy accounts a quarter of the world’s nominal GDP. Their economy is three times bigger.
MAGA has done more damage to this country than anything since the Civil War.
@Sleeping Dog:
Evidently we’re going to re-shore more than just industry. We’re going to need to start planting coffee. Shouldn’t be a problem what with all our well-known tropical farmland and inexpensive and experienced labor. I mean, it takes four years before a coffee plant yields fruit, but everyone can wait for their coffee, right?
@Michael Reynolds:
Conservatives often think the rule of law and government regulations are silly nannystate things which only benefit the poor.
But they are the foundation of a working market system. Without the guarantee of protection of rights, without the guarantee that the materials you buy are not toxic or fraudulent, no business can thrive.
This is why investments in Third World countries are so risky- you never know when a local big shot will force you to pay a bribe, or steal your property. And now America is creating an investment environment on par with Nigeria.
@Sleeping Dog: What does your observation tell you about Democrat commitment to immigration reform? To my eyes, it looks like just another partisan politics football to use to show us that Democrats “really are different.”
And they are, to the extent that conservative/Republican “lite” constitutes “different” to you, I guess.
@Michael Reynolds: El Salvador produces plenty of coffee, and we’re already shipping slave labor there. Why stop at 1929?
Incorporate in Europe but manufacture in China.
@just nutha:
Possibly, but to me on immigration and a number of other issues, congressional dems and Biden for that matter were and maybe still are, captured by purity partisans that would rather lose, than not get everything they want.
@Sleeping Dog and @Steven:
I get the disappointment/frustration that the Democrats didn’t do more to protect us from what we are facing now and I agree. But, what evidence is there that protections based in the law would matter even in the slightest now? Now, after the law failed to disqualify Trump from the ballot in 2024. Now, as the Trump administration’s 70+ day disruption is purposely using Executive actions to avoid needing the Republican controlled Congress to legislate to similar outcomes.
The American people, in their infinite wisdom, decided Trump and his Enablers could be above the law as long as SCOTUS and the Republican Senate said he could be and as long as the press/punditry let Trump claim the magically power to solve inflation with a head nod.
Our problems are bigger than congressional inaction in the past.
My suspicion is that the markets hadn’t baked in anticipation of the Trump tariffs because many serious people could not really believe that he would do something that batsh!t crazy. Now, not only has he done that, he has also conclusively demonstrated that he’s perfectly capable of doing more, even crazier things. The Klown Kar has no brakes, and the markets are realizing that.
Amateur prediction: we will see some minor rallies in the market over the next month or two, as people who don’t really believe in the possibility of collapse try to buy low, and programme trading at institutional investors continues to chug along using formulas that no longer apply*. And then some new insanity from the Putin White House will bring everything crashing again, much lower.
*I have some money in a robot-traded fund that buys and sells ETFs. You would expect its holdings at the moment to be heavily skewed away from stocks and toward precious metals and real estate and TIPS — but they aren’t. I suspect the robot was trained on historical data that is completely worthless for decision-making in the current environment…
@DrDaveT:
I mentioned the other day that there’d be a harrowing of the MAGAts, aka suckers. The same cretins who bought Trump NFTs will jump in, give us a dead cat bounce, then be wiped out. As their billionaire overlords prefer.
Drezner, Krugman and WaPo have some thoughts on this.
My Clif notes take is this is mostly dominance display based on Trump’s weird mercantilist theories that having a positive trade balance makes you a winner, negative trade balance is for losers. Trump wants to dominate almost every other country, so he is trying to force positive trade balances against each and every one.
On the above reasoning, this absurd formula makes sense:
“WaPo Gift”
“Krugman”
“Drezner”
@Michael Reynolds: ” The same cretins who bought Trump NFTs will jump in, give us a dead cat bounce, then be wiped out.”
Wait — you mean Newsmax won’t always have a market cap bigger than Warner Bros Discovery?
@DrDaveT:
Suspicion? It was commonplace to hear Trump supporters say Trump wouldn’t really do the bad stuff he promised to do.
@wr:
Minecraft is looking good for WBD. If James Gunn pulls off a Superman/DC reboot they may come off life support.
I haven’t yet read much about tariff effects on IP. Will American movies be hit with reciprocal tariffs?
@Scott F.:
If it had been codified into law, that could have provided some defense. As it stands, there are none. The extent of the felon’s lawlessness wasn’t predictable when Dems held Congress, but his maliciousness was well known.
@Michael Reynolds:
The felon seems to ignore IP and services in general, but other countries, particularly Europe won’t. Speculation that the EU will erect barriers to the wall street banks, the big consulting companies and go after the FAANGs. Note they are already freezing out US defense contractors. Given IP is such a fat target, it’s hard to see how it doesn’t face its own tariffs.
@Sleeping Dog: In my worldview, the rationalization doesn’t matter. YMMV.
[…]
“My suspicion is that the markets hadn’t baked in anticipation of the Trump tariffs because many serious people could not really believe that he would do something that batsh!t crazy.”
Yes, denial is a helluva drug. For sure
I doubt that it was literally ChatGPT. Musk has his knockoff ChatGPT, Grok, where free speech rules or whatever. And I’ve seen reports that Grok does the same thing,
@Sleeping Dog:
Some defense per what country’s law? Ours? Not any more.
One of our two major parties, in the defense of their criminal president beginning in his previous term, took the stand that codified law could be easily weaponized against their political opponents. Across all branches, this party reinforced this premise through press conferences, impeachment acquittals, and SCOTUS rulings. Exonerated, Trump rode this permission and the electorate’s narrow self-interests to re-election.
Coulda, woulda, shoulda – doesn’t matter in our new world. Rule of law is dead.
@gVOR10:
I knew he would do a lot of bad shit, I did not expect the scope and magnitude of the April 3 announcement.
@wr:
I have not found it practical to attempt to time bear market rallies.
ETA:
https://bsky.app/profile/did:plc:t6ubj2wlhc34awzcymh3qpur/post/3llvswqx4bk23
Trump, 2023
I’m really glad that I took my money out of the market. Even if it all recovers, the sleep I would be losing is not worth it.
@Kari Q:
I moved all my money into high(ish) yield bond funds before the Doughboi’s inauguration.
So far they’re weathering the storm well. But I’m ready to jump out any day.
@DrDaveT:
I’m fully expecting Trump to go on one of the Sunday shows and say this. Then watch the markets tank again on Monday.
@Sleeping Dog:
I would love it if the EU/UK would say screw it and block Meta as a sanction. It would screw with the UK though as everyone seems to use WhatsApp like crazy. A girl can dream though. A Twitter block would rule too.
LGM has a gift link to an Ezra Klein/Krugman interview in NYT:
NYT:
LGM:
Me:
Speaking of dull-normal ten-year-old’s, I think that is best case of Trump’s actual intelligence, considering the advanced senile dementia/cognitive impairment most of you all persist in not seeing. He could be worse, I think likely is.
ETA: For other countries this means retaliatory tariffs are not necessarily the best response. As it may not be feasible to end trade surpluses with the U.S., it might be best to assume trade barriers are here to stay and just ameliorate, work around, look for alternate markets, let U.S. just go on being what it will be. But, of course, various kinds of retaliation are likely part of the mix.
One thing for damn sure, this is a fight Trump/U.S./GOP have no chance at all of winning.
The stupidity of the exercise is underlined by the way Trump keeps talking about “reciprocal tariffs” being half what other countries are “charging America”, when anybody can easily look up other countries’ average tariff rates and confirm he’s talking arrant nonsense. Indeed one of his own “fact sheets” cited a (misleading) “simple average tariff” for the EU which was less than half the 20% rate he’s imposed on them.
The loyal MAGA sheep will persist in dismissing any suggestion his figures are crazy, but slowly the reality will seep into everyone else’s consciousness that Trump’s “emergency tariffs” are insane.
Looking at the various investments in my portfolios, I am mostly struck by the breadth of the decline. EVERYTHING* is down — large cap, small cap, corporate bonds, Treasuries, TIPS, REITs, emerging markets, municipal bonds… even gold. The only thing that was actually up noticeably last time the markets closed was mortgage-backed securities; oh joy.
There is no hedge against Trumpism.
*Cue Gary Oldman from Léon: The Professional…
@DrDaveT:
Really? The indices I watch had bond prices up both 4-4 and 4-5, same for the bond funds in my accounts.
@DrDaveT:
@charontwo:
The cost of bonds is down, but the yield is trending up. You don’t make money on the price of bonds.
FYI…in 2008 the DJIA lost 20% but by the time the crash was over it lost 50% and took 6-7 years to recover.
So we have that going for us, which is nice.
Apologies to Carl Spackler.
@Sleeping Dog:
The US services trade (includes all the internettery stuff, and media) is a massive target profile.
As the EU was already pursuing cases re META etc about data privacy violations, anti-competitive search output, and illegal content, those cases are going to push ahead.
Tough luck, tech-bros.
However, the EU is unlikely to void US IPR; that’s “going nuclear”.
As would be cutting off the US from the SWIFT interbank system, which just happens to be run out of Belgium, not the US, which surprises the MAGA.
And other moves, like blocking exports of the most advanced chip fab photo-lithography machines, which just happen to be only made in the EU.
etc etc.
But push the EU too far, they will bite back, hard.
@just nutha:
China is in some ways sub-optimal.
More expensive than it used to be, and a notorious cheat re IPR.
India, otoh…
Amusing parallel:
After Brexit, and with evidence of the damage mounting, the Brexit ultras were saying: “we may not see the benefits for 50 years”
Now MAGA are saying the same about the Trump tariffs: “we must look past the short term pain and think of the long term benefits.”
lol
Nutcases, in both cases.
As Keynes said: “In the long term, we are all dead.”
@charontwo:
Sorry, I was imprecise. Bond funds were down — they do not behave like the bonds they are based on. Buying individual bonds is much harder for most investors. TIPS are an extreme example of this — owning shares of a TIPS ETF is not much like owning the actual inflation-protected bond.
I had a chat with my bother today, who does logistics/data/software (SAP and all that) for a rather large US multinational automotive parts producer.
Plants in US, UK, Canada, Mexico, Germany, China, etc.
Their entire business model has just been wrecked, it seems.
His concise view:
“Thank God I’m about to retire, all debts paid, pension fund maxed out, and shifted most vested stock into bonds ISA’s. It’s all just gone to hell.”
This is, or perhaps was, a thriving business, employing thousands of rather well paid people, developing production across the world, making substantial returns for it’s investors, and it’s been torpedoed below the waterline by a bunch of idiots.
@Daryl: @DrDaveT:
Here is a chart of TYX showing that, in the past week, yield is down, price up.
https://finance.yahoo.com/quote/%5ETYX/
@Daryl:
Back around 1980 long Treasuries were paying around 10% or so and you could have done very well buying them and holding a few years, really nice capital gains.
@JohnSF: Of the choices offered though, China probably offers the highest RO production investment, which is what I thought the question was.
Warning, paywalled:
“John Ganz”
There will not be any shortage of people the Trump flacks can use to show (i.e., imply) lots of people like the new tariffs.