Man looks in the abyss

The President may have seen enough. Stocks seem to like that.

Author

Josh Brown
April 23, 2025

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To be honest, I’ve grown bored of the day to day market commentary this spring. It’s all just become different variations on the same thing:

Trump said this…

Then Powell said that…

Then China said this…

And then Bessent said that…

Lutnick…

Back to Trump…

Bessent…

Navarro…

China…

Powell…

Navarro again…

Trump again, but louder…

Lutnick (poorly) defends it…

etc ad infinitum.

In the meanwhile, Fortune 500 companies are giving out two sets of guidance for the full year during their Q1 earnings calls: Here’s how the rest of the year will go if we end up in recession and here’s the outlook if we don’t, you pick.

The economic data is saying, en masse, “Deceleration with a chance of inflation spikes” which explains why the rolling correction turned the month of April into one of the worst months of all time for the S&P 500 headed into this week. Monday was a capitulation for sure, if not THE capitulation which may come later in the cycle. All eleven S&P 500 sectors were down. The fear had turned to apathy. Someone remarked “This is the quietest 3% sell-off I’ve ever seen.”

Never short an apathetic market. When investors get to the point where they just expect it to go lower, regardless of day of the week or news of the moment, you can get a bounce. We got one Tuesday and today it’s continuing.

But this is no ordinary bounce. It’s being accompanied by a change in tone from the White House. It seems the Trump inner circle has seen enough of the damage they themselves have wrought with these anachronistic ideas about the economy and misguided convictions about what it means to have a trade deficit with an allied country. It seems they’ve begun fully taking in the scope of what all this uncertainty can do to an economy in a very short period of time. It seems they’ve heard enough from congresspeople who are hearing from small businesses, unions and Main Street who are hearing from customers.

And now, finally, they’re capitulating too.

Gone is the tough talk about “we’re not even paying attention to the stock market.” No more statements about “Wall Street has to take some pain now.” The interconnectedness of it all - something SecTreas Scott Bessent understands full well - is dawning on the only person who matters.

In the last 48 hours, we’ve heard the following:

U.S. Treasury Secretary Scott Bessent said on Tuesday that he believes there will be a de-escalation in U.S.-China trade tensions, but negotiations with Beijing have not yet started and would be a "slog," according to a person who heard his closed-door presentation to investors at a JP Morgan conference.

Bessent described the current bilateral trade situation as a two-way embargo, and neither side sees the status quo as sustainable, the person said. Bessent added that the Trump administration's goal was not to decouple the world's two largest economies.

Bessent said that the current situation, with 145% U.S. tariffs on Chinese goods and 125% Chinese tariffs on U.S. goods, was unsustainable, saying that a de-escalation would happen over the "very near future" that would provide "a sigh of relief" for markets, the person said.

Reuters

Bessent doesn’t get to stand on that stage and say that unless he has been given license to say that. Because it’s very different from the rhetoric that started this mess.

We’ve also heard:

President Donald Trump on Tuesday said he has “no intention” of firing Federal Reserve Chair Jerome Powell before his term leading the U.S. central bank ends next year.

“None whatsoever,” Trump said in the Oval Office when asked to clarify that he did not seek Powell’s removal. “Never did.”

The comment represents a dramatic shift for Trump, who has recently ramped up his rhetoric against Powell and declined to rule out the possibility of taking the unprecedented step of firing him.

U.S. stock futures rose sharply across major indexes following Trump’s latest remarks.

Trump, who has heaped pressure on the Fed chair to cut interest rates in hopes of goosing economic growth, said last week of Powell, “If I want him out of there, he’ll be out real fast.”

CNBC

Futures were shot out of a cannon after this statement. Goodie gumdrops, the President is going to stop threatening to violate the constitution and crash the dollar.

Additionally, we’ve heard Elon Musk on his Tesla conference call confirm that he’s been advising the President that lower tariffs are better than higher tariffs and that free trade is better still.

Here’s the quote:

Tesla CEO Elon Musk said that he will lobby the Trump administration to ease off of its sweeping tariff regime as he appears set to step back from Washington during the company's earnings call on April 22.

"I've been on the record many times saying that I believe lower tariffs are generally a good idea for prosperity but this decision is fundamentally up to ... the president of the United States," Musk said. "I'll continue to advocate for lower tariffs rather than higher tariffs, but that's all I can do."

While Tesla assembles its vehicles in the U.S., the company is exposed to the tariffs as it imports parts from other countries.

USA Today

Stocks capitulated just as the administration capitulated and now we’re somewhere “off the lows” in terms of both prices and the tenor of the trade war. The business community combined with some of the finance folks in the White House to get the message through. I’m sure the recent plunge in favorability ratings from the political polls had a big impact too.

Here’s my guy Neil Dutta (RenMac):

I did a little exercise using the NT function on my trustY Bloomberg Terminal. Since the beginning of March, the S&P 500 has shed a total of 719 points on days Howard Lutnick and Peter Navarro have been the biggest story. By contrast, if Bessent has been the biggest story on the day, the S&P 500 has advanced a total of 52 points. So, Bessent is good for about 1ppt up on the S&P500. By contrast, the others are a drag of about 13.5ppt. Trump's recent comments around Powell, his soothing words around China, all tell you that Trump is starting to "feel the market." I'm not sure how long it lasts or when it stops (probably until the next bad hard data point), but it is welcome.

Neil’s chart is hilarious:

RenMac

(BTW we have Neil Dutta on The Compound and Friends next week, you’re not going to want to miss it.)

For a few days, the Howard Lutnick / Peter Navarro trade warrior / China hawk contingent has been off the radar and the market has found some solid ground to stand upon. Things can change (Peter Navarro went to jail for Donald Trump, he’s not walking away casually just because the stock market doesn’t like him), but this is where we are now.

What’s next?

Hopefully a deal with a Japan-sized economy so the rest of the world sees that there is indeed a path. Then we can get back to worrying about a conventional economic slowdown rather than brushing up on our Smoot-Hawley-era economics and pondering the possibility of a 1930’s style collapse.

Is that so much to ask?

The Abyss

Lou Mannheim sidles up alongside Bud Fox as Fox is strolling through the brokerage firm’s boardroom on his way to being arrested. Lou’s the guy that warned him earlier:

“You’re on a roll, kid. Enjoy it while it lasts, because it never does.”

Now the roll has ended so Lou hits Bud with a bit of bastardized Nietzsche:

“Man looks in the abyss, there's nothing staring back at him. At that moment, man finds his character. And that is what keeps him out of the abyss.”

We’ve been looking in the abyss since the run-up to Liberation Day on April 2nd. We’re all tired of it. Trump got tired of it too.

So we bounce.

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What Are Your Thoughts?

On a brand new What Are Your Thoughts? Michael Batnick and I react to Tesla’s earnings, talk Bitcoin, gold, American Exceptionalism in the stock market and a whole lot more.

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That’s all from me today - have a good one! - Josh