You have to admit that “Liberation Day” was a worthy occasion – trillions of dollars were completely freed from the clutches of international capital and thrown to the wind, into the fire of personal ambition and illusion. The stock market rout on Thursday, following the fateful demonstrations of signs in the Rose Garden near the White House by the US president, resulted in a loss of almost $3 trillion. Apple alone lost $300 billion in one day. And it’s far from clear that the rout is over, as on Friday, before trading opened, futures on major U.S. indices continued to turn red, along with all other indices around the world, from Japan to Europe. The markets have not seen such a drop since March 2020, when the pandemic began. This is a quick review from Ivan Kompan, Edinburgh Business School analyst.
But who cares about falling indexes when the greatest leader of all time embarks on a historic mission?! He doesn’t fail—everything goes “according to plan” and is destined for phenomenal success. “This is a big deal. I said it would be, and it is…” the U.S. President told reporters. Hopefully, he wasn’t referring to the historic stock market crash. As Larry Summers, former U.S. Treasury Secretary, aptly put it: “Markets usually crash due to a banking crisis, a pandemic, or a disaster. We’re not used to such reactions to a president’s actions—especially when he’s proud of them. This is dangerous.” Hard to disagree. But not for Trump, who confidently declares: “Markets will thrive, the country will thrive!” Whether we like it or not.
The global reaction to Trump’s antics—there’s no better word—was sharply negative: EU – “Retaliatory measures are in the works”; China – “Cancel tariffs or face countermeasures”; Germany – “We must pressure President Trump”; Mexico – “Preparing a strong response.” The IMF and WTO also warned of negative impacts on global trade and economic growth.
Will countries try to negotiate? Likely. For Japan, Trump’s tariffs are a national concern. The UK also expresses interest in a deal. But it’s hard to imagine China staying silent. So, expect a few more rounds of “fun.” Meanwhile, Trump radiates optimism: “The world wants to know if they can make a deal with us!” But in such matters, belief is rarely the best advisor.
How will it all end? No one knows. UBS raised its inflation forecast to 5% and cut U.S. GDP growth by 1% if tariffs remain. Goldman Sachs predicts 1.5% slower growth and 3.5% inflation by 2025. The chance of a U.S. recession just rose from 20% to 35%. More similar forecasts are expected. The word “stagflation” is looming large. But in the White House, all is well: world leaders are “crawling to negotiate,” investors are packing up trillions, America is “getting great again,” and history books are clearing space for the chapter on the greatest president of all time. Amen!
*And finally, we would like to remind you that the information you have just listened to is not an investment advisory. Remember – investments in the stock market are always tied up with financial risks. So be careful and cautious.
