{"id":582,"date":"2025-04-16T19:39:14","date_gmt":"2025-04-16T19:39:14","guid":{"rendered":"https:\/\/thecuriouspractitioner.org\/?p=582"},"modified":"2025-04-16T19:45:11","modified_gmt":"2025-04-16T19:45:11","slug":"a-few-dollars-less","status":"publish","type":"post","link":"https:\/\/thecuriouspractitioner.org\/?p=582","title":{"rendered":"A Few Dollars Less"},"content":{"rendered":"\n

Between unpredictable sheriffs and tariff shootouts, markets are turning into a Western. The only question now: who\u2019ll fire the next shot?<\/em><\/p>\n\n\n\n

In recent weeks, financial markets have felt like a scene straight out of a modern Wild West: unpredictable, volatile, and governed by no clear rules. Every time I glance at my Bloomberg screen, I hear that iconic theme from The Good, the Bad and the Ugly<\/em> \u2014 that haunting two-note coyote call, answered by an echo echoing through digital canyons. So let\u2019s cue Ennio Morricone and his legendary soundtrack to accompany this market standoff.<\/p>\n\n\n\n

Unless you\u2019ve been wandering the desert, you\u2019ve probably noticed that equity markets have taken a beating. Daily swings have reached levels unseen since the COVID crisis. Normally, even for finance professionals, pinpointing the cause of such turbulence is tricky \u2014 the result of millions of interactions, now largely steered by algorithms (nearly 60% of all trades).<\/p>\n\n\n\n

But this time, the culprit seems clear: Sheriff Trump and his tariff revolver. The new trade measures he’s introduced have injected a hefty dose of uncertainty on two fronts: the potential impact of a trade war on the global economy, and the direct consequences these tariffs could have on the U.S. economy itself.<\/p>\n\n\n\n

The story\u2019s similar elsewhere: from commodities to crypto, red is the dominant color. Which brings us to the big question \u2014 how much deeper could this go?<\/p>\n\n\n\n

Let\u2019s begin with the obvious: investors are already struggling to grasp the full impact of the tariffs. Add to that the rapid-fire pace of news, and markets become even more jittery. As long as this continues, a return to calmer waters is unlikely. The situation is reminiscent of the COVID shock \u2014 sudden, global, and exogenous. But if we learned anything from that crisis, it\u2019s that once investors adjust their expectations \u2014 even at the cost of some growth \u2014 a new normal emerges, and markets eventually find their footing again. Right now, we\u2019re in a phase of profit-taking in the face of uncertainty.<\/p>\n\n\n\n

There\u2019s also upside risk: information that markets haven\u2019t yet fully priced in, which could spark a rebound. The real judge remains the economic data. As long as the fundamentals hold, there\u2019s no reason to panic.<\/p>\n\n\n\n

Meanwhile, the political tide may be shifting. Trump, until now unchecked, is facing growing resistance \u2014 both abroad and at home. That shift in tone could force him to scale back his ambitions.<\/p>\n\n\n\n

Governments may also roll out stimulus measures, and central banks \u2014 stuck in a delicate balancing act \u2014 might be compelled to step in and support markets, even if it means sidelining their inflation-fighting goals for a while.<\/p>\n\n\n\n

But not all central banks are equally armed. To borrow a line from the film: \u201cThe world is divided into two kinds of people \u2014 those with loaded guns and those who dig.\u201d The Fed still has ammunition. By keeping rates relatively high, it has room to cut if needed. The ECB does too, though to a lesser extent. But the Swiss National Bank? It\u2019s more on the digging side. With rates already at rock bottom, deflationary pressure, and a franc that just keeps strengthening, its hands are tied.<\/p>\n\n\n\n

So yes, there\u2019s a plausible path back to stability \u2014 even if the trade conflict escalates. But we\u2019d be na\u00efve not to consider what could go wrong. A mild correction can quickly spiral into something worse if key dominoes start to fall: a shock to the banking system or a disruption in the bond market. The U.S. debt market \u2014 especially Treasuries \u2014 is the backbone of global finance. It underpins liquidity, supports the monetary system, and influences the cost of capital worldwide. It\u2019s a giant that shouldn\u2019t be disturbed. But Trump\u2019s actions are starting to rattle it. Let\u2019s hope he knows when to holster his weapon \u2014 because if not, the fallout could be severe.<\/p>\n\n\n\n

To sum up: even if the trade war heats up, markets may find their footing once the initial shock passes \u2014 especially if certain factors spark a rebound. But let\u2019s keep a close eye on the bond market. In this financial Wild West, it\u2019s crucial to know who\u2019s got the gun, who\u2019s digging \u2014 and most importantly, when to step into the frame.<\/p>\n","protected":false},"excerpt":{"rendered":"

Between unpredictable sheriffs and tariff shootouts, markets are turning into a Western. The only question now: who\u2019ll fire the next shot? In recent weeks, financial markets have felt like a scene straight out of a modern Wild West: unpredictable, volatile, and governed by no clear rules. Every time I glance at my Bloomberg screen, I…<\/p>\n","protected":false},"author":1,"featured_media":585,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-582","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economics"],"_links":{"self":[{"href":"https:\/\/thecuriouspractitioner.org\/index.php?rest_route=\/wp\/v2\/posts\/582","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thecuriouspractitioner.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thecuriouspractitioner.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thecuriouspractitioner.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/thecuriouspractitioner.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=582"}],"version-history":[{"count":1,"href":"https:\/\/thecuriouspractitioner.org\/index.php?rest_route=\/wp\/v2\/posts\/582\/revisions"}],"predecessor-version":[{"id":584,"href":"https:\/\/thecuriouspractitioner.org\/index.php?rest_route=\/wp\/v2\/posts\/582\/revisions\/584"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thecuriouspractitioner.org\/index.php?rest_route=\/wp\/v2\/media\/585"}],"wp:attachment":[{"href":"https:\/\/thecuriouspractitioner.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=582"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thecuriouspractitioner.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=582"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thecuriouspractitioner.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=582"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}