Another in a long list of “interesting” days.

PPI came in hot, but the numbers that feed into PCE (which the Fed pays the most attention to) were soft.

The big news is the reciprocal tariffs, or lack thereof.

Normally you would want to parse through every word uttered by the president to divine what is coming. You could do that, but I’m not sure it would prepare you for what is or isn’t coming.

As I read this, I see a laundry list, a huge laundry list, of things that we could potentially do. The first wave on Canada, Mexico, and China was straightforward. Broad-based tariffs, with a set start date, tied to disappointing behavior around fentanyl.

Today’s announcement is the opposite of that. Lots of things mentioned, but nothing really done, not even a specific deadline for imposing any of the possibilities.

My take is that the president was talked down from what he wanted to do by some of his advisors. Maybe, he has also felt that his threats worked so well (Columbia, Canada, and Mexico) that all he needs to do is threaten and countries will line up to give him what he wants?

It does seem odd that he didn’t even bother with an Executive Order. Presumably, there was no EO because he didn’t actually do anything, but that seems out of character?

Maybe, but there was a relatively simple path to exit for Canada and Mexico and the tariffs were so clear that there seemed to be a desire to negotiate. Let’s also not forget that some of what was delivered by Canada and Mexico had already been under discussion during the Biden administration.

Is there a risk that countries don’t come to the table? Sure, since it is unclear what you are coming to the table for. Maybe, and this is less likely, though, you have to wonder, is there widespread support for these tariffs from Trump’s advisors? You would think so, but he did hit Canadian energy with “only” 10% in the first go.

How does Europe, in particular, think about VAT taxes?

How does Europe think about Putin back in the G-8?

Initial response is for stocks and bonds to zoom higher (that started this morning when it was already leaked that there wasn’t necessarily a start date for the tariffs, and it would be no sooner than April 1^st).

The dollar has weakened on the back of that.

The only “asset” that hasn’t done well today is Bitcoin. I cannot help but wonder if a “normalization” with Russia reduces one of the actual use cases of crypto (circumventing sanctions)?

It would be nice to claim victory in the trade wars! It really would be, but…

• This doesn’t seem like Trump’s style of negotiation.
• I’m not sure it compels other countries to come to the bargaining table.
• I cannot imagine that bringing Russia back into the G-8 sits well with the Europeans (who already seem incredibly uncomfortable with the negotiations – which for better or worse, seem to be going along the lines that Academy Securities’ Geopolitical Intelligence Group predicted).

Separate from all of this, look for ongoing support to build out the semiconductor foundry business in the U.S. It is a National Security priority on multiples fronts. It came up at our San Diego Summit and again yesterday during a presentation I participated in with one of our GIG members in Charlotte.

Maybe we need to “squeeze” some shorts, but I suspect that we are going to see tariff related headlines that spook the market as early as next week, if other countries act as calmly to today’s announcements as U.S. stocks and bonds have.

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