On Monday, the market took comfort that Liberation Day might not be so bad. I’m not sure why the auto tariffs announced yesterday couldn’t wait until Liberation Day, but I do have a view.

• It could be that tariffs are working so well already, that the administration couldn’t wait to launch more. That is not why I think they did it.
• It could be that so far global leaders haven’t come “begging” for better deals. China has been particularly silent. Canada and much of Europe seem to be contemplating their own set of counter tariffs. My best guess is that the 25% auto tariffs were launched to get countries to the table ahead of Liberation Day so the administration could get even more wins.

I’m currently stuck on two main themes:

• The tariffs are going to be worse than feared. Countries are “negotiating” or not negotiating with the president differently this time around. I really don’t think it helps that we are fighting so many countries and on so many fronts (add Russia/Ukraine and DOGE to the tariff mix). It makes it difficult to hold negotiations and increases the risk of mistakes by taking on so many challenges at once.
• As per last weekend’s Be Afraid Of Certainty, there is a consensus that once we get “certainty” we can rally. I think that, even after some concessions (assuming they happen), the reality of the “deal” will be that it hurts the global economy and corporate earnings and therefore the stock market more than is already priced in.

There is supposedly some monthly and quarterly rebalancing that could bring buyers of stocks and sellers of bonds, but I remain bearish on global risk assets, with the rest of the world outperforming, but on another leg lower.

I did have the privilege of being on Bloomberg TV live from London this morning (Academy starts at the 1:14:30 mark). We discussed a range of subjects including capital flows and the American Brand.

Good luck, maybe I will be wrong about Liberation Day (in terms of the magnitude of deals/concessions reached, and what is already priced in), but I cannot get there.

It is also getting more difficult to ignore inflation risks (or price level increases to be precise) which in turn makes it difficult to be bullish bonds as much as I would normally be, given my level of concern about the economy.

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