Blain’s Morning Porridge 11th March 2025 – Trump’s Blunt Force Market Trauma
“See no evil. Hear no evil. Speak no evil.”
Howls of pain as US markets sink through 200 day moving averages and into correction phase! It’s increasingly clear Trump Version 2.1 still contains significant bugs and 404 errors. Sadly, we can’t simply reboot the OS and hope it starts ups again. Markets will just have to adjust to the new Trump reality.. and it’s likely to hurt. A lot.
Ah, how warmly I recall these heady days of last November and the rosy expectations of market upside from Trump’s victory! My Republican chums were delighted; the absolutely terrible Biden administration would be replaced by an administration of competency and focus.
Remind me…? What did the Trump trade promise to deliver for markets, justifying a sustained rally for corporate America?
- A stronger US economy?
- Lower Taxes?
- A reduced Deficit?
- Deregulation?
- Smaller, more efficient Government?
- Global Respect for a strong ‘Merica?
So how’s that all working out for you? Now, I know what you are thinking… We ought to give Trump more than 50 days to deliver and demonstrate how he’s going to do it… Did the words bluff or bluster just flash across your eyes there? Flood the news is the same as bury it in the treacle of distraction.
Back in November I was reassured by US clients the rest of the MAGA agenda; crippling the perceived “deep-state”, a war on wokery, the crusade against gender politics, and even the imagined threats of immigration… would barely touch the markets – the meat of the second Trump era would be a business and tax friendly government. Autocracy…? Perish the thought. The noise that emerged during the campaign was all be about negotiating positions, and the “art of the deals” Trump was set to secure for the USA. Markets didn’t care what Trump, Musk and Vance said or did across Social Media – they saw and heard what they wanted to see: sustained sensible pro-business, pro-markets government run by a new combative, but effective Donald Trump v2.
Tell me? How does that coffee taste now?
There is the old adage:
- You want? All the above.
- You’ll be happy with? A stable economy in times of change.
- What you get? A clown show
Clown show is the reality, where toxic masulinity and the bully-boy is to be celebrated.
The current corrections across US markets are not down to some AI start-up missing its revenue numbers, or a chip maker selling slightly fewer chips than the analysts expected. It’s not due to a bank massively underestimating credit losses– a factor that would have riled the market. It’s entirely due to the actions of the President of the United States of America and his confederates. 100%.
It’s happened pretty much as I predicted. A few weeks ago I wrote: “To the best of my recollection, never before has a global financial catastrophe/crisis been named after a single individual, but The Trump Trauma of 2025/26 could be a first.” (Where will it end? Trade Wars, Growth and China.)
No wonder markets are melting down. And, this is not a buying opportunity. The solid fundamental reasons stocks are crashing (see above) remain firmly in place, and will for the next 4 years, or someone starts talking common sense in Washington. Till then I am long gold, short Tesla and short Buttcon.
You know we are in deep trouble when Trump’s Money-Man, Scott Bessent is now trying to blame “the economy we inherited” for the omnishambles of chaotic policy now hitting the air-conditioning. Bessent, the man who orchestrated Soros’s Black Tuesday attack on Sterling in 1992, is already looking…. economical with the actuality. 8 weeks ago Trump inherited a strong US economy, strong markets, faith in the dollar, and pretty much a love of mom and apple pie values across the Global Economy.
Poking sharp-pointy tariff sticks into the wheels of the global trade, upsetting capitalist western allies, cosmetically slashing govt jobs and pretending to cut spending, while poring petrol on geopolitical hot-spots hasn’t quite worked the way the Deal Artist planned. He’s even peeved the Canadians… the nicest people on the planet.
The US economy now looks poised on the edge of the abyss, about to step forward. Recession is on the cards. Inflation risks are highly elevated. High yield bonds and stocks are in tumble mode as the risks of stagflation rise. The funding need that will result from tax-cuts and spending plans will barely be scratched by DOGE. As risks rise, stocks are falling, credit default costs are rising… Companies are scaling back capex and hiring plans as the economic stability they expected is replaced by a complete and utter <insert word of your own choosing>.
You can guarantee it can get worse. Trump will ramp up the pressure and threats to the Fed’s independence, demanding they do his bidding and rate-cut him out of the crisis that’s emerging. Internal dissent within the cabinet of fools will rise. I would not be in the least surprised to see Steve Bannon lead a break-away faction, arguing that Musk, Vance, the Tech Lords, and Bessent have betrayed MAGA with their naked pursuit of personal wealth. Or maybe manufacturing a global financial crisis to slash the wealth of billionaires was the fiendishly cunning plan all along? Doubt it.
Markets pretend they are long-term – but are largely driven by the short-term. Even so, the current ructions in US stocks are beginning to look like a double-whammy:
- The short-term unravelling of the Trump Trade as inflationary and recessionary threats escalate, as job creation contracts, will continue fuelled by Trump’s verbals, Vance’s aggression and Musk’s theatricals.
- A long-Term reassessment of the American Century is underway – the future of the US dollar as the de-facto global currency, the collapse of the capitalist western world’s cohesiveness, and the potential of new global trading patterns is taking shape. America has blown the trust and exceptionalism that made it the economy to follow.
Even Trump’s cynical shout-out promising to establish a Strategic Bitcoin/Crypto reserve over the weekend has fallen on deaf ears. When everyone is running for the bunkers, who’d be stupid enough to play crypto tomfoolery?
Interesting isn’t it.. The big argument underlying BTC in recent months has been rising institutional participation and engagement. Where are they today? The ETF managers don’t buy – they extract fees from the unwary. Financial market pros (the real ones rather than the overnight crypto-bankers touting imagined expertise) aren’t going anywhere near the maelstrom currently engulfing the last “greater fools” thinking they are buying Buttcon on the cheap.
I could go on and write about how bitcoin miners are being wiped by higher costs, fewer coins following the halving, and tumbling demand. Maybe coins are twice as valuable (maybe not), but they are definately twice as expensive to mine! I could write about how the Hedge Funds that played Micheal Saylor’s MicroStrategy (MSTR) are now positioned for the inevitable collapse as the fund continues to buy coins in a tumbling market. The fund is down 50% since the election – losing more than $3bln on the coins it’s bought since then. Yesterday it announced a new $21bln pref stock sale to fund more BTC buying… let’s see how it goes.. but MSTR increasingly looks to be the only buyer of Buttcon! How long will borrowed money sustain Saylor as buyer of only resort? How many folk will that fool?
Folk say I am too pessimistic. Maybe. But there are great opportunities out there to profit from the current foolishness.
Out of time, and back to the day job!
Bill Blain
Author the Morning Porridge
Founder Windshift Capital
Partner Shard Capital
7 Comments
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The funny thing is that people have stopped buying Teslas all together. Owners are getting rid of them at any cost. Those holding on to theirs will only have a worse shock later, as you say hope is never a good strategy. There is no way around it. Tesla is the only company of the Musk group that is still profitable, but barely. That was on the last earnings call, where Elon proclaimed 2025 will see a slight growth but 2026/27 will be insane. If the story of Nissan during the first Covid lockdown is any guide, they would have burnt through cash reserves in less than 6 months. If indeed sales are down 50-60% in Europe and China, Tesla will severely be bleeding cash. The car business is peculiar and rather expensive business.
Inventory at highest levels
biggest price decreases,
new Model Y selling at same level as the old one,
less CO2 credits
I’d be surprised if Tesla was still profitable in Q1 2025.
The next Tesla earnings call will be a blockbuster, but let’s keep Elon busy looking for fraud in the US government. There’s surely no one more qualified.
Bill,
I’ll put my caveat at the end to get to the point. I have read your columns now for many years, since you help me to (continue to) understand private equity and the bond markets. Which I really appreciate. I think, though, if we were to look through your pile of missives, we would find many a time when you expressed similar astonishment regarding Tesla, Buttcon, market exuberance, and the looming, though never coming, next recession. You’ve been warning of the demise of the dollar long time before Trump, and been pounding the keyboard with the rise of either the Yuan, or some currency-soup alternative to the dollar as the means of global exchange for as long as I can remember. Anyone with half a brain and a memory that goes back further than 1999 has shared the astonishment.
Is Trump triggering? Of course. He’s an overt bullsh*tter. Every politician is one, though, it’s just that Bill Clinton, and Obama, and Reagan, and Bush(es), on and on, did their bullsh*tting with a wink and a nod and some likable panache. It’s still bullsh*t. And what you may not realize is there is some truth behind what he’s attempting to do, though it’s like cosmetic surgery with (yeah) a sledgehammer. Take the Education Department. Please! (sorry Mr. Youngman). I know for a fact that people on the Right have been wanting this to go away for decades and see it as only some kind of conduit into local schools for leftist propaganda.
Now you may say, “well, their style smoothed the skids.” Uh huh. And pushed the pain down the calendar past their own due date. Obama was famous for blaming Bush for all the ills he inherited.
Ok, fine, ancient history. But it’s the very reason he’s popular with the people who have felt ignored and used by the smarmy politicians, bankers and community activists, etc.
Frankly, given that recessions are essentially inevitable, you should be joyous this one will fall on Trumps watch, and he can get the blame…even though most of causes of the bubble have little to do with him. Oh, and by the way, we are now way down to levels not seen since….August of last year. So painful.
My caveat: When I had the chance to vote against him in an election where my vote had any meaning, I did. That was the primary in California in 2016. Being a right-leaning conservative in CA or WA (where I’m at now) my vote at the national level is irrelevant. They are both winner-take-all states in the presidential elections, and lean so heavily to the left it’s embarrassing to call it “democracy.” Of course, that’s what the Left thinks democracy should be, but I digress. I don’t like Trump, I don’t like his style. I wish the Republicans hadn’t self-immolated over the last 15 years. I also wish the Democratic party had realized that moving to the left was alienating the majority of the population, and all they had to do was run someone who was normal and they might have picked up more from the Right than they lost from the middle. (Hint: Hillary and Kamela aren’t normal).
One other thing, though. The EU, (pronounced “ewww”) has been failing to get their act together for longtime now. All y’all have been able to mess around with puffery since ‘merika had your back and you had our cash. Every time you, Bill, complain about how awful the EU is, and how messed up the political/economic situation is “over there,” I just have to shake my head and ask, when will you people get yo’ act together?
Well, here you go.
This recession will be different. I wont stem from market exhuberance or foolishness, but from the actions of government. It will have the effect of then exposing the speculation behind 30* stock valuations, crypto and tight Junk spreads.
Yes.. I know I am Cassandra… constantly calling a dip that never comes…
SOmething wicked this way comes…
But on the other hand.. always remember my No 2 Mantra: “Things are never as bad as we fear, but seldom as good as we hope.”
I think you are correct in No. 2 Mantra. As I said, I do appreciate reading your views, keep up the good work!
Perhaps this is President Trumps brilliant way of solving the boarder ‘crisis’. He’ll make the United State a country that no one will WANT to emigrate to, solving the migrant crisis once and for all.
It’s always been a mystery how people are able to say Trump is just another politician, his lying, his behaving, his trolling, his bullying, a bit more extreme but in essence a bullsh*tter just like other politicians, to make him seem comparable, in his own style. How is it possible to rationalize Trump, when by all means of measurement, it seems pretty obvious that the guy is nuts, insane, seriously psychologically ill, and it’s getting worse. You replaced an old guy with some signs of dementia with an old guy with serious signs of narcissistic personality disorder, traits of sadistic behavior regarding friends and enemies, obsession with envy of dictators He’s a conman, a fraudster and a convicted rapist. He takes pleasure in causing pain to others, especially enemies, extorting from the vulnerable, unable to empathize or take advice from anyone. He doesn’t think through. He’s erratic and irrational. He’s a moron, a buffoon, a coward, and an idiot. What counts, is media attention, being in the headlines. He’s not a decent human being, that’s why he cannot be stopped by shame. Grab em by the … . He said that. Biden didn’t say that. We’ve known that for years, it’s not a secret. His behavior is public record. Not recognizing it, is a choice. I suspect most Republicans do not know what they are dealing with. Those who have, left the boat long ago.
Yves… I am sure about half America and an even larger percentage of Yooropeens agree with you… but I suspect Trump is a distraction from the real crises that will emerge in terms of the debt and confidence. Promising massive spending and tax cuts, while screwing your global relationships, and jumping into bed with Russia – which is now a client state of China (dependent on raw materials demand from Beijing) does not seem a smart move to increase confidence in Treasuries, or on how long the dollar remains our medium of value.
However, never forget: “Things are never as bad as we fear, but never as good as we hope”.