Recession Risk Grows After Trump Turns Heads With Interest Rate 'Liberation' Post
An aggressive tariff stance from President Trump likely erased stock market gains achieved by the Federal Reserve.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
It looks like around 10 hours ago, there was a post on truth social from the president’s account.
Markets overnight didn’t react to the post immediately, but I think it is one reason we are seeing any post FOMC gains erased. S&P futures were in the 5,640 to 5,660 range immediately prior to the FOMC’s 2 p.m. ET release. They traded as high as 5,720 and are now, all the way back to that 5,640 to 5,660 range.
In Wednesday's post-FOMC note, I argued that one reason for the rally in stocks was another day without bombastic tariff headlines. Maybe this isn’t “bombastic,” but the markets are going to have to start thinking about what is going to happen on April 2. If we really are getting tariffs across the globe (seems likely) and there is limited excess manufacturing capacity in the U.S. (there is some, but much would need to be constructed), then I see a rocky road ahead for the economy.
Maybe that recession risk is why the president thinks the Fed should be getting ahead of the curve?
There is a lot of “chatter” about uncertainty. My fear is that the market isn’t pricing in what seems more and more certain: global tariffs shocking global supply chains.
Maybe it was just an 11 p.m. post that will be retracted on Thursday, but all I can think of is The Simpson’s meme where Lenny is replacing "zero days without an accident" with another "zero days without an accident."
I have become increasingly concerned that the current mix of policies will push us into recession and may not work in the end.
Friday could get extremely interesting with allegedly a lot of negative convexity in the option market on Friday’s expiration. That tends to amplify market moves.
I went to bed concerned that the Fed possibly backing down on tariffs and some semblance of a deal in Ukraine (though it looks more like a "pearender" – a combination of peace and surrender – than peace) would spark this rally people have been banking on. TQQQ saw large inflows and is now back to its highest share count since May of last year (yes, more bets are being placed on three-times leveraged Nasdaq 100 than heading into the election).
Across the board I see “froth,” despite all the negative sentiment reports.
I woke up on Thursday morning relieved that the market is now back to pre-FOMC levels but suspect soon I will regret not being bearish enough.
I’m now not only nervous about U.S. stocks but am going to take profits on holdings that have worked, from FXI and KWEB, to some utilities, chip and energy (XLE included).
I’m worried about global de-risking here.
Good luck, and I think I’m finally going to have to suck it up and get a Truth Social account to track the president (though at least 10 people I follow and countless others immediately reposted the president’s comments – seen above – on X/Twitter).
At the time of publication, Tchir was long FIX, KWEB and XLE.
