The fact there is any doubt the recent down turn on Wall Street is caused by Trump’s tariff mania is ridiculous. Things might be down otherwise but the markets are responding to the insanity of taking North America to edge of a trade war and then partially backing off for a month (aren’t the tariffs on China still in place). There should be no hedging here and to create space that some of this is not Trump’s doing is very village indeed. No risk taken by trying to be too careful here, Nate. Sometimes the harsh reality is the River. Trump has done this, no one or anything else, only Trump via his actions so far in his second Presidency.
Umm, it’s pretty much all Trump’s fault and the folks who stupidly voted for him. What was wrong with the economy? What’s changes? Trump and his moronic Project 2025 people illegally interfering with the government. You know, I didn’t know I was signing up to a Substack of a Trump lackey. Just tell me about antitrust. I can interpret the news myself.
Nate is on the record as having voted for Kamala, so I'm not sure how that qualifies as a "Trump lackey"
He often criticizes Trump, but he's also been pretty critical of democrats on occasion, so I'd say if you're looking for a lot of rah-team commentary you'd save yourself some angst by unsubscribing now.
Personally I don't need yet another voice telling me how awful everything is that Trump is doing, I can easily see that shitshow for myself; it's not like they're hiding it. Hysterical fearmongering doesn't help. I like Nate's less hyperbolic and less partisan critiques, and I like that they're aimed at democrats too when it's deserved.
You lost me at Project 2025. I searched for "tariff" in P2025 and the positions it takes are as follows (generally speaking):
1) Tariffs are bad and cost Americans money.
2) That said, we should match and charge reciprocal tariffs on countries that charge them on American goods, with the goal of getting them to reduce/eliminate their tariffs.
3) That said, we should charge them on the PRC to extricate our supply chain from them for goods with national security impact.
Trump is clearly not following P2025 when it comes to tariffs.
Blanket tariffs on friendly countries (Canada, Mexico, UK, EU, others) are not good economically and that comes as close to "settled science" as it comes.
Nate, this piece does a great job laying out how Wall Street is reacting to Trump’s latest moves, but I think it misses a key point: instability isn’t just a side effect of Trump’s policies—it is the policy. We saw it in his first term when he disbanded the Global Health Security Directorate, leaving the U.S. unprepared for COVID, which tanked the markets. Now, he’s doing the same thing—gutting key institutions like NOAA, NIH, the IRS, and Inspector Generals—undermining the very agencies that keep the economy running smoothly.
Markets hate uncertainty, and yet Trump thrives on creating it. Tariffs, trade wars, firings—it’s all part of the same chaotic approach that makes investors nervous and drives long-term instability. The idea that he’s somehow “good for business” is a myth that’s starting to unravel in real time. At some point, Wall Street will have to wake up and realize that the short-term sugar highs of deregulation don’t outweigh the damage caused by a leader who sees governing as a reality TV show.
Business coverage makes me laugh. Hard to believe Tesla’s stock price fall is blamed on Musk spending too little time managing it. Really? Stocks aren’t tanking as fast as sales or as fast as his already bad reputation. If I were a company, the last thing I’d want is more attention from him.
It doesn't help that the electric car market is getting clobbered in the PRC by local companies, and globally by people souring on the concept of electric cars.
Nor is it very relevant. Tesla is impacted by all market forces, but customers are fleeing in direct response to his dazzling performance in Washington. Hard to believe people read only what’s next up in their info bubble.
Trump is a moron, and while Musk is a good businessman: he's an addled conspiracist who belongs nowhere near the government. Sadly the American voter is not the wisest.
Agree with the analysis and would add the point that markets are not sure how much economic pain Trump will tolerate. He's not running again and has a war chest to enforce loyalty in Congress through 2026 at least. The conventional wisdom has been he would be spooked if the stock market went down, but he has been hinting that he could accept some short-term pain to achieve the economic transformation he seeks. Wall Street tends to think that the sun, the stars, and the moon all revolve around it. The possibility that the President doesn't care is a shock.
Markets are driven by forward-looking cash flow—actually the collective belief of what it will be. At these levels of valuation, there isn’t a lot of room for error. Anything that makes that cash flow less certain or diminishes it, will cause a negative market reaction. And the evidence is piling up on the minus side, like consumer confidence, RE transactions, WalMart statements, tariffs, etc. create a risk-off environment. China has a liquidity trap, it seems. So when you add this all up, you can’t say there’s going to be a recession with certainty but the current administration is making it more likely. You should keep in mind that the top 1-2% of incomes make up almost all of the variance in consumer spending. The rest live paycheck to paycheck. And the top 1-2% are influenced by their perception of portfolio wealth and their home value. So making them feel less rich means a drop in consumption, that almost always will cause an economy to slow down. We don’t have to have a recession to make the markets go down, a 1% Q1 GDP print would create real havoc and if Q2 was weak, look out.
My reaction to pieces like this is heavily colored by my memories of 1987, when we had a 22% drop in a single day which turned out to be a harbinger of nothing in particular.
I’m a federal employee and I’ve been cutting back on spending given Trump’s EOs and the uncertainty. When appropriate, I tell businesses that’s why I’m cutting back.
The first thing to understand is that the electorate, for a variety of reasons, elected a crazy person. OK, OK, I realize that’s not a diagnosis. The published diagnosis was profoundly sociopathic narcissism coupled with pathological lying, and was first published in 2017, with two updates, the newest just last year.
The 40 psychiatrists and other assorted mental health professionals include the former chief for all psychiatric services for the US army.
Sociopathy certainly isn’t foreign to Wall Street and may even have rendered Trump more understandable to our mandarins of finance, many of whom are sociopaths.
But that doesn’t make Trump entirely predictable. He’ll utter threats and act out and people will assume it’s an act. But when not taken seriously Trump has shown that he’s quite willing to make good on his threats and to even double down on them, as he just did with Canada by raising the tariffs to 50%. There’s a bit of “I’ll show you!” in all of it.
Wall Street got caught with its pants down because they thought of Trump as somehow normal, which his actions show that he is not. He really does believe that he alone can fix it.
Assuming Trump completes his term we can expect one thing, and one thing only, based on his first term. Chaos.
Why else do you think that a schmuck like Biden got elected?
People were weary of the chaos, mixed with Trump’s feckless handling of the Pandemic.
It seems that Americans cannot learn that maintaining a democracy is not an undemanding process. Too many prefer to think magically rather than critically. An aspect of that is normalizing crazy. This inevitably leads to the mess we’re in.
I'm very interested in what all these laid off NGO, USAID funded nonprofits and federal employees are going to do for employment. And if a Dem wins in 2028, do they just bring back all the funding and government agencies that got shut down? Do we have a future of very violent whiplashes every 4 - 8 years?
The Canadians learned a bit from watching the American's drop the ball.
And some conservatives too, who are realizing that without Trudeau they have to play to a more mainline voter or appeal to unifying nationalism.
Mind you, on the subject of American's dropping the ball, I don't think the GOP has put two and two together to realize that a 1% shift would have made Harris president, so MAYBE they shouldn't talk so much shit in the white house.
Wait wait wait, I thought Trump is a businessman and would be good for the economy? He said he deserved credit for the 2024 market rallies. Was he lying?
On GDPNow: I've done deep dives on it now and again. It has some embedded time series models that will create some oddities from outliers. It's a good aggregator if patterns are in the center of the distribution. Right now there are two issue, one is related to how gold imports are handled (they should be excluded and aren't) and the second is that preemptive imports should bloat inventories which are not yet fully captured. The correction for gold leaves the outlook at +0.4% as of March 7.
This is a silly argument. There was no sign at all that a recession was coming before Trump started meddling! So yes of course there will be a recovery, but there’s no benefit to pulling forward a recession.
The fact there is any doubt the recent down turn on Wall Street is caused by Trump’s tariff mania is ridiculous. Things might be down otherwise but the markets are responding to the insanity of taking North America to edge of a trade war and then partially backing off for a month (aren’t the tariffs on China still in place). There should be no hedging here and to create space that some of this is not Trump’s doing is very village indeed. No risk taken by trying to be too careful here, Nate. Sometimes the harsh reality is the River. Trump has done this, no one or anything else, only Trump via his actions so far in his second Presidency.
It's not doubt. It's mindless partisan loyalty
Umm, it’s pretty much all Trump’s fault and the folks who stupidly voted for him. What was wrong with the economy? What’s changes? Trump and his moronic Project 2025 people illegally interfering with the government. You know, I didn’t know I was signing up to a Substack of a Trump lackey. Just tell me about antitrust. I can interpret the news myself.
Nate is on the record as having voted for Kamala, so I'm not sure how that qualifies as a "Trump lackey"
He often criticizes Trump, but he's also been pretty critical of democrats on occasion, so I'd say if you're looking for a lot of rah-team commentary you'd save yourself some angst by unsubscribing now.
Personally I don't need yet another voice telling me how awful everything is that Trump is doing, I can easily see that shitshow for myself; it's not like they're hiding it. Hysterical fearmongering doesn't help. I like Nate's less hyperbolic and less partisan critiques, and I like that they're aimed at democrats too when it's deserved.
Nate is clearly not a trump lackey. He's the embodiment of a centrist midwit.
You lost me at Project 2025. I searched for "tariff" in P2025 and the positions it takes are as follows (generally speaking):
1) Tariffs are bad and cost Americans money.
2) That said, we should match and charge reciprocal tariffs on countries that charge them on American goods, with the goal of getting them to reduce/eliminate their tariffs.
3) That said, we should charge them on the PRC to extricate our supply chain from them for goods with national security impact.
Trump is clearly not following P2025 when it comes to tariffs.
Blanket tariffs on friendly countries (Canada, Mexico, UK, EU, others) are not good economically and that comes as close to "settled science" as it comes.
OP was clearly referencing Project 2025 as it relates to Trump’s actions around the bureaucracy and key agencies, not tariffs.
Nate, this piece does a great job laying out how Wall Street is reacting to Trump’s latest moves, but I think it misses a key point: instability isn’t just a side effect of Trump’s policies—it is the policy. We saw it in his first term when he disbanded the Global Health Security Directorate, leaving the U.S. unprepared for COVID, which tanked the markets. Now, he’s doing the same thing—gutting key institutions like NOAA, NIH, the IRS, and Inspector Generals—undermining the very agencies that keep the economy running smoothly.
Markets hate uncertainty, and yet Trump thrives on creating it. Tariffs, trade wars, firings—it’s all part of the same chaotic approach that makes investors nervous and drives long-term instability. The idea that he’s somehow “good for business” is a myth that’s starting to unravel in real time. At some point, Wall Street will have to wake up and realize that the short-term sugar highs of deregulation don’t outweigh the damage caused by a leader who sees governing as a reality TV show.
What Trump is doing re: DOGE COULD be good for business, if it were being done in an orderly fashion, which it most certainly isn't.
Agree 100% that Wall Street hates uncertainty. And if the job market gets wobbly, Main Street will hate it too.
Business coverage makes me laugh. Hard to believe Tesla’s stock price fall is blamed on Musk spending too little time managing it. Really? Stocks aren’t tanking as fast as sales or as fast as his already bad reputation. If I were a company, the last thing I’d want is more attention from him.
It doesn't help that the electric car market is getting clobbered in the PRC by local companies, and globally by people souring on the concept of electric cars.
Nor is it very relevant. Tesla is impacted by all market forces, but customers are fleeing in direct response to his dazzling performance in Washington. Hard to believe people read only what’s next up in their info bubble.
Trump is a moron, and while Musk is a good businessman: he's an addled conspiracist who belongs nowhere near the government. Sadly the American voter is not the wisest.
Agree with the analysis and would add the point that markets are not sure how much economic pain Trump will tolerate. He's not running again and has a war chest to enforce loyalty in Congress through 2026 at least. The conventional wisdom has been he would be spooked if the stock market went down, but he has been hinting that he could accept some short-term pain to achieve the economic transformation he seeks. Wall Street tends to think that the sun, the stars, and the moon all revolve around it. The possibility that the President doesn't care is a shock.
Yea but in his first term he constantly pointed at the stock market because it was doing well.
Markets are driven by forward-looking cash flow—actually the collective belief of what it will be. At these levels of valuation, there isn’t a lot of room for error. Anything that makes that cash flow less certain or diminishes it, will cause a negative market reaction. And the evidence is piling up on the minus side, like consumer confidence, RE transactions, WalMart statements, tariffs, etc. create a risk-off environment. China has a liquidity trap, it seems. So when you add this all up, you can’t say there’s going to be a recession with certainty but the current administration is making it more likely. You should keep in mind that the top 1-2% of incomes make up almost all of the variance in consumer spending. The rest live paycheck to paycheck. And the top 1-2% are influenced by their perception of portfolio wealth and their home value. So making them feel less rich means a drop in consumption, that almost always will cause an economy to slow down. We don’t have to have a recession to make the markets go down, a 1% Q1 GDP print would create real havoc and if Q2 was weak, look out.
My reaction to pieces like this is heavily colored by my memories of 1987, when we had a 22% drop in a single day which turned out to be a harbinger of nothing in particular.
I’m a federal employee and I’ve been cutting back on spending given Trump’s EOs and the uncertainty. When appropriate, I tell businesses that’s why I’m cutting back.
The Carville Rule still stands: it's the economy, stupid.
The first thing to understand is that the electorate, for a variety of reasons, elected a crazy person. OK, OK, I realize that’s not a diagnosis. The published diagnosis was profoundly sociopathic narcissism coupled with pathological lying, and was first published in 2017, with two updates, the newest just last year.
The 40 psychiatrists and other assorted mental health professionals include the former chief for all psychiatric services for the US army.
Sociopathy certainly isn’t foreign to Wall Street and may even have rendered Trump more understandable to our mandarins of finance, many of whom are sociopaths.
But that doesn’t make Trump entirely predictable. He’ll utter threats and act out and people will assume it’s an act. But when not taken seriously Trump has shown that he’s quite willing to make good on his threats and to even double down on them, as he just did with Canada by raising the tariffs to 50%. There’s a bit of “I’ll show you!” in all of it.
Wall Street got caught with its pants down because they thought of Trump as somehow normal, which his actions show that he is not. He really does believe that he alone can fix it.
Assuming Trump completes his term we can expect one thing, and one thing only, based on his first term. Chaos.
Why else do you think that a schmuck like Biden got elected?
People were weary of the chaos, mixed with Trump’s feckless handling of the Pandemic.
It seems that Americans cannot learn that maintaining a democracy is not an undemanding process. Too many prefer to think magically rather than critically. An aspect of that is normalizing crazy. This inevitably leads to the mess we’re in.
I'm very interested in what all these laid off NGO, USAID funded nonprofits and federal employees are going to do for employment. And if a Dem wins in 2028, do they just bring back all the funding and government agencies that got shut down? Do we have a future of very violent whiplashes every 4 - 8 years?
"So, although Justin Trudeau isn’t running again, his Liberals have entirely closed a massive gap with Conservatives."
This isn't an although so much as a because, Trudeau's massive unpopularity was a millstone around the neck of the Liberals.
The Canadians learned a bit from watching the American's drop the ball.
And some conservatives too, who are realizing that without Trudeau they have to play to a more mainline voter or appeal to unifying nationalism.
Mind you, on the subject of American's dropping the ball, I don't think the GOP has put two and two together to realize that a 1% shift would have made Harris president, so MAYBE they shouldn't talk so much shit in the white house.
Wait wait wait, I thought Trump is a businessman and would be good for the economy? He said he deserved credit for the 2024 market rallies. Was he lying?
On GDPNow: I've done deep dives on it now and again. It has some embedded time series models that will create some oddities from outliers. It's a good aggregator if patterns are in the center of the distribution. Right now there are two issue, one is related to how gold imports are handled (they should be excluded and aren't) and the second is that preemptive imports should bloat inventories which are not yet fully captured. The correction for gold leaves the outlook at +0.4% as of March 7.
Still bad!
Yes, and that 0.4% number is from the Atlanta Fed itself, at https://www.linkedin.com/pulse/gdp-forecasters-some-gold-doesnt-glitter-atlantafed-fxb2e/
Sigh.
1. A recession is coming.
2. But do recessions last forever?
If you're going to do this i suggest extrapolating public opinion out to the recession itself and then the recovery
This is a silly argument. There was no sign at all that a recession was coming before Trump started meddling! So yes of course there will be a recovery, but there’s no benefit to pulling forward a recession.
What are interest rates at again?