Trump Pushed The Red Button…Now What?
Happy Sunday…
I still do not have my voice back which is weird.
A few weeks ago I said turning 60 is a window into being 70 and this flu has opened up that window. I need my 40’s back again soon.
With the $VIX over 45 on a Friday, my email and messages have lit up with questions about what I think and what am I doing, so I will walk you through some plans/ideas for the week ahead and hopefully it will help.
The big question is why are we in a panic if Trump was telling us exactly what he would do for the last few months?
Obviously, as Batnick describes, a lot of people in charge of a lot of money did not thing he would push the big red ‘tariff’ button.
Of course he did …and in his mind and his followers mind at Fox and Newsmax, this is winning!!??…
Trump’s tariff announcement this week has wiped out $8.2 TRILLION in stock market value — more than was lost during the worst week of the 2008 financial crisis.
— Holger Zschaepitz (@Schuldensuehner)
10:06 AM • Apr 6, 2025
BUT, here we are and what the hell should we be doing?
First things first the ‘good news’ from my friend Charlie who has run the data:
The S&P 500 fell 10.5% over the last 2 trading days which was the 5th biggest 2-day decline since 1950.
What has happened in the past following the biggest 2-day declines?
Stocks were substantially higher over the next 1, 3, 5 years every time.
bilello.blog/newsletter
— Charlie Bilello (@charliebilello)
3:43 PM • Apr 5, 2025
Next up the $VIX panic data:
The $VIX ended the week at 45.3, among the highest weekly closes in history.
What has happened in the past following the highest $VIX levels?
Stocks rallied 100% of the time over the next 1, 2, 3, 4, 5 years with returns far above historical averages.
bilello.blog/newsletter
— Charlie Bilello (@charliebilello)
4:30 PM • Apr 5, 2025
The data says the same thing I have shared in other panics…if you buy the indexes this week and walk away you SHOULD be happy.
Of course, we are in this particular panic for one reason and that one reason is Trump (see Red Button above) and so it is hard to trust the data.
The next thing about a panic, and this will be no different even though Trump is in charge, is that huge NEW trends will emerge. Some of these trends may just be acceleration of past trends. You do not have to catch these in the heat of the panic.
In May 2020, a couple months into the COVID panic, I noticed $AXON ( ▼ 7.89% ) breaking out and Bitcoin breaking out. I wrote about them in this newsletter and bought them. I am still holding them in my ‘degenerate economy index’. So, build lists, pay attention to people that have been right in the past, and clean your lists of stocks and people that are causing you aggravation.
In March of 2020 as the COVID panic began and the $VIX spiked to 90, the panic was intense.
I decided to start a podcast series titled ‘Panic With Friends’. I thought it (the podcast) would last 30 days (it lasted 3 years) and would be a good time capsule piece on panic. It really is. I recommend going to listen to at least a few of the podcasts from the first month on Spotify or Apple. The very first was with my pal Jim O’Shaugnessy (March 11, 2020) and it is timeless as it relates to market panics.
So what about these ‘new trends’ that might emerge and trends that might accelerate.
Gold has been going up, Bitcoin has been holding well, European defense stocks have been on a tear. My friend Lewis Johnson came on Trends With Friends last month to discuss all this and ‘deglobalization’ (probably worth a listen again).
My ‘degenerate economy index’ has been hammered like everything else the last month, but I have a high cash/bond position coming into the crash so I can put some to work this week. Below is a chart of the current drawdown and how it has performed against the $QQQ ( ▼ 6.21% ) since inception and the current positions…
The degenerate economy is not going to end, but I am sure that some of the companies in the index will change over the next 90 days as this panic unfolds.
I’ll leave you today with some great insights from Howard Marks appearance on Bloomberg summarized by Kitsugi.
1) The world isn’t ending. But the rules are changing. For decades, investors benefited from one major tailwind: globalization. Trade was open. Supply chains were efficient. Goods were cheap. That tailwind is fading.
2) Instead, we’re entering an era of fragmentation. Countries are rethinking trade. Tariffs are rising. Domestic production is being prioritized—even if it’s more expensive. That has real consequences for economies, inflation, and asset prices.
3) This matters because trade isn’t just a political issue—it’s an economic engine. When nations specialize and trade efficiently, everyone benefits: • Lower prices • Greater productivity • Broader access to goods Undoing that comes at a cost.
4) One of the most underappreciated effects of globalization was how much it kept inflation in check. As global trade expanded, the cost of many goods fell—dramatically. That helped central banks. It helped consumers. It helped investors.
5) But when trade contracts, cost pressures rise. Domestic manufacturing often means higher wages, higher input costs, and less efficiency. This isn’t inherently bad—but it is inflationary. It changes the assumptions we’ve relied on for decades.
6) So what do you do with this information? You rethink the context for every investing decision. For example: If inflation is structurally higher, then valuation multiples may need to adjust lower. The cost of capital rises. Discount rates matter again.
7) Howard Marks isn’t saying “sell everything.” He’s saying: recalibrate. Don’t rely on old models in a new world. Assume less mean reversion and more regime change. Be intentional about the risks you’re underwriting.
8) Another key point: Forecasting doesn’t work in environments like this. We can’t reliably predict what policies, partnerships, or power dynamics will look like 6–12 months out. That’s not a flaw—it’s reality.
9) So if we can’t forecast precisely, what can we do? We anchor to probabilities, positioning, and price. Instead of trying to predict, focus on how assets are priced relative to this new backdrop. Then ask: is that reasonable?
10) When uncertainty is high, discipline matters more. Use volatility as a lens for discovery, not avoidance. The best opportunities often arise when others are hesitant—but you must stay grounded in logic, not emotion.
11) And finally—don’t confuse falling prices with rising risk. Markets go on sale. That’s part of the cycle. The critical question is not, “Will it go lower?” It’s: “Am I being compensated fairly for the risk I’m taking?”
12) Despite these shifts, the U.S. still remains a strong place to invest. It has deep capital markets, world-class innovation, and a rule of law that—while evolving—still outperforms most alternatives. But the “automatic best” label? That’s now a judgment, not a given.
13) Howard Marks isn’t offering a market call. He’s offering perspective. This moment requires more than just reacting. It calls for re-evaluating how we invest—and why. The world is shifting. Smart investors will shift with it.
Have a great Sunday and hope this helps.
PS – As always, I will be doing my weekly Momentum Monday show with Ivanhoff tonight it will be up on Youtube early as always.
