The new normal

Yesterday morning this pathetic blog told you to chill, stay invested, remember that crappy markets come along frequently, always pass, and that it’s not different this time.

The Trump tariff terror cannot last, we said. And hours later it didn’t.

Markets roared. The gains were obscene. Many wondered why the US president would make such a profound announcement in the middle of the trading day. After all, the unveiling of tariffs was held until markets had closed on April 2nd. But eight days – and a stock panic later – they were paused in mid-session, providing anyone with advance knowledge the tickle of a lifetime.

Well, at the opening today, more losses. Sizeable ones. The euphoria was gone.

Why? Because he’s still here.

Donald Trump has surrendered his last shreds of credibility. The flip-flops, back-of-the-envelope strategies and conflicting messages from his team have made every other country and leader know that America is no longer a reliable partner. Nobody actually comprehends why this fetish with failed 19th Century economics is taking place.

Companies cannot make long-term investment plans in this environment.

Nobody will trust any trade agreement, formal or otherwise, made with this administration.

The pissing match with China, the second-largest economy, threatens global stability, trading patterns, supply chains and prosperity.

The odds of a US recession fell immediately with Trump’s back-pedalling yesterday. The odds of a global one increased as he bumped up tariffs on China to 125%. Insane.

The US has been weakened dramatically in less than 100 days, alienating allies, attacking friendly neighbours, withdrawing humanitarian aid from the world, deporting innocents who were then sold to the El Salvadorian prison system, gutting medical and scientific research, stroking Putin while berating Zelenskyy, attacking key universities, ending vaccine research, mocking and trolling Canada, hobbling government with 300,000 firings, releasing felons convicted of January 6th crimes and dissing NATO.

“Do you think any of those countries would ever come to help us?” Trump asked this week. He forgot that only once in NATO’s history was that obligation under Article 5 invoked – Nine Eleven. And, yes, we all came.

“A whole pile of invaluable trust just went up in smoke,” says NYT veteran columnist Thomas Friedman, a Pulitzer Prize guy. “In the last few weeks, we have told our closest friends in the world — countries that stood shoulder to shoulder with us after Sept. 11, in Iraq and in Afghanistan — that none of them were any different from China or Russia. They were all going to get tariffed under the same formula — no friends-and-family discounts allowed.

“Do you think these former close U.S. allies are ever going to trust getting into a trench with this administration again?”

Nope. Ain’t happening. Look at the current Canadian federal election campaign – which is now all about how Canada can become less reliant on the US, on trading more domestically, on finding new export markets, crafting a better maple industrial strategy and boosting investment in our own enterprises and future. Ironically, people in China seem to be saying the same thing. President Xi is riding a wave of patriotism, while we go Elbows-up.

“Thanks for your calming words of advice to stay the course yesterday,” writes John. “I’ve heard them echoed by plenty of others since lame ducky President Trump unleashed chaos. Who knows if the goal is to boost US manufacturing and to satisfy his fetish to on trade balances or any of the other theories. In the face of uncertainty it makes sense to stick with an already robust and proven plan. Choking down those emotions even as markets slide and investors begin to eschew US debt. Having grown up in the UK I’m pretty good at it.

“So if the advice to the household balanced and diversified investor is to stay the course, who is doing the all selling and why? Why are highly paid professional institutional investors not set up to ride out the storm too? How much of the selling is from panicked individual investors?”

Machines, John. The same algos that triggered a sell-off this morning moved to spend trillions yesterday afternoon as values exploded. Billions of shares change hands globally in minutes, often taking advantage of small price changes, with human-defying speed. Of course, there are always buyers and sellers triggered by options. Pensions funds with collective trillions have to keep those funds deployed. Traders and money managers are paid for active management, not to sit on interest-bearing fixed-income assets. Volatility is the jet fuel that powers day traders. In short, the risks to retail investors, especially those holding just a handful of individual equities, grows every week, month and year. Stay balanced, diversified, liquid and boring.

This is the new normal. A hobbled, diminished, shamed America is the new normal. So is an ascendant China and a more balkanized world. Expect more of the unimaginable. Trump has already lost. Don’t follow him down.

About the picture: “Here is a recent photo of Mr. Rex waiting for his dinner,” writes Rob. “An iguana he is not.. He’s not very interested in Donald Trump and would probably bite him if that lunatic adult toddler got anywhere near the family here in Hamilton. Good dog! After all these years, still a blog (Greaterfool.ca) worth visiting and reading everyday. Keep going.”

To be in touch or send a picture of your beast, email to ‘[email protected]’.

Source: https://www.greaterfool.ca/2025/04/10/the-new-normal-5/