Stock Market Vigilantes On The Warpath

The Stock Market Vigilantes have spoken. They don't like tariffs, and they don't like mass firings of federal workers. That's because they don't like stagflation, and they fear that Trump 2.0's focus on these measures could cause a recession with higher inflation.

They really didn't like President Donald Trump's message on Sunday during an interview with Maria Bartiromo on Fox News, as evidenced by today's extreme selloff, which caused the S&P 500 to fall below its 200-day moving average (chart). He indicated that tariffs are here to stay. Only a few weeks ago, it was widely assumed (by us and others) that Trump would use tariffs as a temporary negotiating tool that would result in freer trade and a more level playing field for American exporters.