Start Of A Rough Week

While on-the-floor trading hours are limited, there’s a sense that the stock market never closes. Sunday night, the futures market forecasted what could likely happen on the floor when the bell rings Monday morning, with stocks tumbling at one point more that 1,700 points from Friday’s close. With Asian shares plummeting this morning and the Nikkei dropping 8%, we could be in for an extremely rough day.

On one hand, there is some limited news as the inflation report for March is released. Bureau of Labor Statistics figures on Thursday are projected to show that the consumer price index edged up 0.1%. That is the lowest increase since last July. The core Consumer Price Index, a better measure of underlying inflation because it excludes often-volatile food and energy costs, is seen climbing 0.3% from February and 3% from a year ago. The annual pace would be the slowest since 2021. If those rates hold, then the markets should respond accordingly.

But for right now, Thursday is still a very long way from Monday and none of us have had enough coffee for the rough ride this Monday will bring. The price of US oil fell more than 3%, sinking below $60 a barrel for the first time since April 2021. Oil prices have been in a freefall as investors fear tariffs could plunge the global economy into a recession that would sap demand for flights, shipments, transportation, and travel — all activities that require fuel.

And the usually chipper Bitcoin joined the declines, too — falling 5.6% to $78,736.93. Digital currencies jumped considerably after the election on the assumption that the Punk administration would bring a lot of support for the sector that Wall Street has yet to fully embrace. That support hasn’t been as strong as hoped, however, and the response to tariffs brings the currency more in line with the reality of the markets.

“Last week’s brutal selling pressure is set to continue on Monday, as the market is telling us that investors still lack clarity on the implications of tariffs, tariff retaliation and are worried that economic growth is likely to slow to a complete stall or recession,” said James Demmert, chief investment officer at Main Street Research.

Thursday is likely to be our only chance for a reprieve from the panicked selling, and even the Labor statistics may not be enough to keep Wednesday’s news from fueling yet another massive dump of stock. On Wednesday, America will impose significantly higher “reciprocal” tariffs on nearly 90 countries that have the highest trade imbalances with the United States.

The White House said on Sunday that 50 countries had asked to negotiate lower rates but failed to provide a list of which countries that might include. Rumors have circled around India, Vietnam, and Taiwan, but when asked about the example of Vietnam and the potential lifting of tariffs, Trump’s senior counselor on trade and manufacturing, Peter Navarro, said the administration wasn’t negotiating.

“This is not a negotiation. This is a national emergency based on a trade deficit that’s gotten out of control because of cheating. We’re always willing to listen; that’s what [Felonious Punk] does best,” he said. “But I want to just say to the world here: If you want to come and talk to us, don’t say you want to lower the tariffs and be done with it. It’s the non-tariff cheating. Stop manipulating their currency, stop dumping stuff in.”

For all the blabbering from the White House, countries such as Australia, Canada, and others can be seen digging in their heels and resisting doing business with the US. Canada was quite open last week about being willing to establish economic treaties that leave the US completely out of the picture. Australia has said over the weekend that “America is having a break with reality,” and that the world will move on to a new reality without them.

“The bleeding continues because Punk or Bessent didn’t say anything to calm fears, and now the bull run is about to sputter to a sad end,” Jay Woods, chief global strategist at Freedom Capital Markets, said. “I’m sick of people saying we’re overdue for this. We’re still eagerly waiting to get a reprieve and nothing is happening. If we don’t hear from [Punk] very soon, the pain will continue.”

Don’t get too anxious about hearing from anyone. As we mentioned yesterday, Punk’s been busy golfing all weekend. [Funny how he keeps winning at his own golf courses.] With Israeli PM Benjamin Netanyahu coming in later this morning, we doubt anyone in the White House will want to take a question about tariffs. There is also some speculation that Treasury Secretary Scott Bessent is floating around his CV and may leave soon because he’s already tired of having to defend what he knows to be a terrible idea.

“We came into the year way too bulled up, and the question now is, what valuation you want to pay for a market that’s facing so much uncertainty?” said Michael Purves, chief executive officer at Tallbacken Capital Advisors. “Earnings are at risk, margins are at risk, higher inflation and lower growth is a combination that no one wants.”

Economists expect tariffs to touch off a price shock. A 10% universal tax on imports would imply a one percentage point increase in US consumer prices from its latest reading of 2.8%, estimates compiled by Ned Davis Research show.

“[Punk] officials say they aim to make Main Street wealthy again even if that’s bad for Wall Street,” Ed Yardeni of Yardeni Research wrote in a note to clients. “The problem is that Main Street owns lots of equities traded on Wall Street, so the two streets prosper and suffer together.”

JPMorgan’s Chief Economist Bruce Kasman is saying that tariffs the Punk administration announced on US trading partners would likely push the US and possibly the global economy into a recession in 2025 if they remain in place.

The immediate question seems to be: who is going to blink first? None of the US’ closest and most friendly trading partners are the least bit amused by the President’s bullying. Any one of them will happily remind Punk that he can’t force them to buy or sell anything. Should they all decide that an internal EU-only economic collaboration is, then the US could lose out on a high number of goods that would suddenly disappear completely off store shelves. An even greater fear might be a Southeast Asian economic system built around China, which they view as stronger and more reliable. China has the strength to completely freeze the US out of critical Asian markets.

Be sure that the traders on the floor of the stock exchanges this morning will be slipping in pools of blood as the sell-off continues. If you happen to know a stockbroker, you might want to take them out for lunch. By noon, they may not be able to afford it for themselves.

We’ve never seen this level of insanity in the markets before.