Political Circuit Breaker
Trump's surprise move on April 6th to grant a 90-day tariff reprieve for trading partners facing elevated tariffs triggered a sharp relief rally across risk assets.
I anticipated some inflection point where he would bend the knee or be pressured by outsiders. Activist investor Bill Ackman took to Twitter again to try to persuade the president to give a 90-day pause on tariffs.
I am keeping this newsletter short due to the constant flow of news. Best is to follow me on Twitter and or join Discord.
Anyone??? Deja Vu??! 2020
I mentioned my trading plan on Friday, April 4th, on Discord. As a bonus, I also mentioned my plan in my last article on April 6th.
IF Recession scenario – wait for SPX 4800–5000
If a recession hits, wait for a deeper correction before buying aggressively.
- Target: Look for the S&P to fall to around 4800–5000.
- The “Trump put” trigger:
- Trump with a low approval (40–45%) and if unemployment claims rise above 300k, indicating economic weakness.
→ At that point, markets might expect strong pro-market or pro-growth policy moves (such as rate cuts, tax cuts, or stimulus), which would be bullish for stocks. I am willing to go “all-in”
Markets mainly read this as a signal that the administration is watching markets closely for the "Trump put" to be back in play. Still, uncertainties about China and the EU haven't disappeared.
There were also broader economic pressures, from tightening credit to rising long-end yields.
Which played out
Political circuit breaking
So, the timing of the tariff pause seems far from accidental or coincidence.
This looks like a political circuit breaker after a ~20% drowdown in the S&P500 since the highs and growing signs of credit and Treasury markets
Wider spreads, higher CDS premiums, and a 70bps spike in 30Y yields over the past week
While the rate has eased slightly, Washington is willing to react and is watching price action. This could cause some investors/hedge funds/banks/institutions to dial back from their bearish tail-risk hedges.
Want to buy stocks cheap with these extreme moves and opportunities? Don't know which one to buy? Are you nervous about creating a broker account? The community and I will guide you through the whole process.
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Europe
The 90-day pause runs out on July 8th, but what happens after that, nobody really knows; this is only a partial step back. The base 10% tariff is still in place for all countries, and some trading partners like Europe, Japan, and Vietnam face higher rates. While the headlines sound like a relief, much of the tariff pressure remains.
Europe hasn't backed down (afaik, maybe something changed during the time of writing). They're planning to respond with their tariffs on US goods starting as soon as April 15th. Additional rounds are on the table for later this year, possibly in May and December.
That keeps the risk of a tit-for-tat escalation alive, especially since the original fight was over US tariffs on steel and aluminium. So, while the market rallied on the pause, the broader trade picture is still tense.
China - Fight to the end
In China, things look grim. Trump's decision to hike tariffs on Chinese imports to a massive 125% from the already punishing 111% pushes China's total US effective rate to around 136%. Beijing, any conciliatory talk hasn't softened 50% counterpunch; it's the opposite.
Chinese rhetoric remains "Fight to the end," and Trump's comment that he's "waiting for the phone call" shows little urgency. This is a long game, and there's no off-ramp in sight for now.
The market experienced some relief, but the fundamentals remain shaky. Business and consumer sentiment have declined, and with rising yields and tightening credit, the risk of an economic slowdown has not vanished.
In fact, given the fragility of sentiment, the markets may overreact to any soft data from the U.S., particularly regarding the labor market or consumer spending. Weak reports will likely impact equities and the dollar more significantly than usual.
Expect markets to overreact and seek opportunity and these overreactions on both sides. Trading 10 delta calls and 10 delta puts just by betting on the change in risk perception has been hilariously profitable for me.
Cheap options, and I don't want them to expire or hit the strike. The change of risk perception is enough to profit on them as they easily go up 30, 50, 100, 300%
And surprise, surprise
Oh, and retail?
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