John Rekenthaler writes that a new era would begin if
Liberation Day tariffs are enacted.
Recent stock market history may not be helpful in navigating the situation.
Dare I say, this time will be different?
"President Trump’s Liberation Day tariffs are the most radical economic proposal of my lifetime. If enacted, they will reverse a 75-year trend of increasing free trade and mutual cooperation among the world’s developed nations. The global marketplace would begin a new era.""For more than 40 years, US equity investors have benefited from buying on dips. The last time that tactic failed with any regularity was during the 1970s and early 1980s, when the previously unknown condition of stagflation confounded the marketplace.""We now face another unknown condition: high global tariffs. How that circumstance will play out is anybody’s guess. But it would be rash to assume that recent stock market history will repeat."https://www.morningstar.com/economy/this-time-it-really-is-tariffs
Comments
Great writer, but I am always skeptical of broad, over-generalized statements like that one:
MW recently did a detailed study of dip buying over time (that I think I've lined elsewhere) and showed pretty conclusively that from 2022-Current it has not worked very well. There was a heyday period, but it definitely did not span 40 years.
Perhaps you are referring to the following MW article published on March 7, 2025?
Warren Pies of 3Fourteen Research calculated that the “golden era of dip buying”
occurred from the end of the 2008 financial crisis to the late 2021 stock market peak.
Pies and his team developed a checklist with seven criteria to determine whether a dip is "buyable" or not.
"As of Thursday’s close, only three of the seven criteria had been met, Pies said.
Yields have fallen, offering some economic stability. The VIX has remained below 25.
And, most important, Pies and his team don’t expect a recession on the horizon."
“'Clients who followed our guidance to reduce risk earlier in the year should look to add back exposure
over the next couple of months … but not quite yet,' Pies said in a report shared by MarketWatch."
https://www.marketwatch.com/story/thinking-of-buying-the-stock-market-dip-heres-what-you-should-know-6e3e74c1
i am tempted by some specific equities, as i do not subscribe to index investing.
but there is a better case elsewhere than the s&p500 :
https://klementoninvesting.substack.com/p/invert-always-invert-the-tariff-edition
"Mr. Bessent said the president was pausing the tariffs because the administration was receiving so many requests to negotiate, and each negotiation would be “bespoke” and therefore “take some time.”
The Treasury secretary did not respond directly to a question about why investors would trust that this was the final word from Mr. Trump after so many changes.
Mr. Trump’s actions cover only the next 90 days. As for any additional tariff exemptions, the president refused to give the clarity many investors are seeking.
Asked on Wednesday how he would decide on any further exemptions, Mr. Trump said: “Instinctively, more than anything else. I mean, you almost can’t take a pencil to paper. It’s really more of an instinct, I think, than anything else.”
No, thank you Mr. President, spare me your instinct. Maybe a more structured and thought-out approach will calm the markets.
The overall US tariff rate on Chinese imports has risen to 145%, a White House official has confirmed to CNBC.
The increase follows a new executive order from Donald Trump raising tariffs to 125%, up from 84%.
An additional 20% tariff, tied to measures targeting fentanyl-related imports, brings the total to its current level.
...he'd probably still proceed with the insanity.
You can't make this crap up...
https://www.cnbc.com/2025/04/10/trump-acknowledged-he-could-cause-a-recession-but-just-didnt-want-a-depression-according-to-wsj.html
(free link)
https://archive.ph/mbhKQ
The hypocrisy of MAGA content creators is astounding!
"Justin Amash, a Republican former congressman, said on X that the about-face showed how
some Republicans’ political beliefs had morphed under Trump to a view they once staunchly opposed.
Though the GOP platform once called to 'stop the socialists,' he said, it now preached:
'The conveniences of modern life are overrated. … Your losses are a small sacrifice for the glory of the nation!'”
Businesses and investors remain bewildered after the 90-day pause on tariffs.
Clarity is needed to reduce massive uncertainty.
"White House press secretary Karoline Leavitt tried to characterize the sudden change in policy as part of a grand negotiating strategy. But to those outside the Trump administration, it looked like a cave-in to market pressure and to growing fears that the president’s impetuous use of import taxes — tariffs — would cause massive collateral economic damage."
"Trump’s ever-changing trade war tactics — which include earlier levies on cars, steel and aluminum, and Mexico and Canada — have already done damage, forcing dazed companies to delay or cancel plans as they tried to figure out what Trump was doing and how they should respond."
“'Right now, it’s hard to know how this is going to play out, given that this is somewhat self-imposed,' Delta CEO Ed Bastian said. 'I’m hopeful that sanity will prevail and we’ll move through this period of time on the global trade front relatively quickly.'”
https://apnews.com/article/trump-tariffs-pause-businesses-reaction-a61a1adcaf6332f6188ae1d70664b898
Sanity -----> Insanity: Reasonably certain given enough time
Insanity ----> Sanity: Good luck with all that
https://www.youtube.com/shorts/CcDlVj9wuLY?feature=share
I stand corrected.