If The Answer Re Trump’s Tariffs Is B, We’re Going A Lot Lower
Bill Ackman thinks it’s A:
One would have to imagine that President @realDonaldTrump's phone has been ringing off the hook. The practical reality is that there is insufficient time for him to make deals before the tariffs are scheduled to take effect.
I would therefore not be surprised to wake up Monday with an announcement from the President that he was postponing the implementation of the tariffs to give him time to make deals.
President Trump has gotten the world's and our trading partners' attention and elevated the importance of resolving an unfair tariff regime that has harmed American workers and decimated our industrial base over many decades.
This is a critically important issue that needs to be resolved, and we finally have a president committed to getting this done.
The problem, however, can't be resolved in days, so why wouldn't a pause make sense to give the president time to properly resolve this critical issue and to allow companies large and small the time to prepare for changes in their supply chains?
The risk of not doing so is that the massive increase in uncertainty drives the economy into a recession, potentially a severe one.
One thing is for sure. Monday will be one of the more interesting days in our country's economic history.
Sven Henrich is hopeful too.
As is former Bloomberg anchor Adam Johnson.
They Don’t Get It Yet
Trump’s reciprocal tariffs look like they are meant to balance trade.
Bill Ackman thinks they are a negotiating ploy. If we’re right, and Bill Ackman doesn’t get it, it’s not priced in. And if it’s not priced in, the market’s going a lot lower.
Missing The Forest For The Trees
Tariffs are the trees; the trade deficit is the forest. Trump has been concerned about the trade deficit for decades. Take a look at his 1990 Playboy interview.
Here’s an excerpt:
Playboy: A group of Japanese visitors to New York was recently asked if there were anything in the U.S. they would like to buy. The answer: towels.
Trump: That's fair trade: They'll take the towels and we'll buy their cars. It doesn't sound like a good deal to me. They have totally outsmarted the American politician; they have no respect for us, because they're getting a free ride.
Of course, it's not just the Japanese or the Europeans—the Saudis, the Kuwaitis walk all over us.
Control-F “tariff” in that interview, and it’s not there. Why should it be? The point isn’t Japan’s tariffs; the point is we’re buying their stuff and they’re not buying ours.
What You Can Do About It
Raise Cash Or Hedge
If you didn’t raise cash or hedge when we suggested doing so last week, you can still do so on Monday, though it might cost a bit more.
If you’re going to hedge individual positions, consider using the optimal collar feature on the Portfolio Armor iPhone hedging app. That might lower your cost somewhat. As a reminder, you can download the Portfolio Armor optimal hedging app by aiming your iPhone camera at the QR code below (or by tapping here, if you’re reading this on your phone). Our app can help you find the least expensive hedges given your risk tolerance and time frame.
Hedge Against A 1987-Style Crash
We shared a post about how to do that.
Consider Some Tactical Trades
We’re working on a couple for Monday. If you’d like a heads up when we place them, feel free to subscribe to our trading Substack/occasional email list below.
If you’d like to stay in touch
You can scan for optimal hedges for individual securities, find our current top ten names, and create hedged portfolios on our website. You can also follow Portfolio Armor on X here, or become a free subscriber to our trading Substack using the link below (we’re using that for our occasional emails now).
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