Consistently Inconsistent…
May 24, 2025
I wish I had something new or particularly insightful to say today but the more things change, the more they remain the same. Tariff pauses, new tariff threats, the only constant is the inconsistency and unpredictability of trade policy. Through it all, somehow, the markets have remained surprisingly resilient. Investor confusion, however, seems evident - the markets open down meaningfully, then slowly climb back up as the day unfolds...and the next day, the market sports ever better gains as the day unfolds only to fade in the last hour to close flat. In surveys, investor sentiment remains negative. On the other hand, at the recent CNBC hosted CEO Summit, CEO's seemed relatively unfazed by all the drama and mainly positive on their prospects.
I continue to be totally puzzled, my feelings similar to those of Jamie Dimon, JPMorgan Chase CEO, who noted his surprise at the ‘extraordinary amount of complacency’ amongst investors (like we noted last time – maybe Jamie is a reader of LWM missives?). Jane Frazier, Citigroup’s CEO, thinks ‘something deeper is going on’ and notes dollar weakness and capital flows ‘tilting more to Japan, India and parts of Europe’. Yet the S&P 500 is up 18% from its ‘Liberation Day’ lows of little more than a month ago. Retail investors have continued to pour money into the markets even as hedge funds mostly missed the rally and suffered losses on their short positions. Feeling hesitant, uncertain about making changes or where to hide? You have lots of company - it is a reasonable reaction.
Tariff policy has generated so much controversy, it has totally obscured the fact that tariffs are a policy tool, not an end in and of themselves. Which might explain some of the confusion since the Trump administration has enlisted, and justified, using tariffs for an ever changing menu of objectives – checking fentanyl trafficking; interdicting the flow of illegal immigrants; generating revenue; reducing other countries’ tariff and non-tariff barriers; incentivizing a renaissance in US manufacturing; and punishing countries whose policies were not in line with the current administration’s world view. Lots of goals…which one has primacy anymore? Have the tariffs succeeded in doing more than roiling international trade and reigniting fears of rising inflation? Good questions...what do you think?
Trump has seized the bully pulpit that being President of the United States provides and has used it more forcefully than any other President in recent memory. Increasingly, however, his sudden pronouncements and threats seem to be viewed with less alarm, at least in financial circles. The administration has ‘blinked’ repeatedly, policies paused, exceptions made. Maybe this is just Trump’s way of negotiating or maybe more reasonable voices within the administration are having an impact. As I wrote above, the only constancy is the inconsistency. It is a difficult time to be a bold investor…patience and prudence continue to be the recommended path.
Trump’s use of his position and power has been expressed in other ways as well. The link below is to a recent Peggy Noonan column. Noonan is a columnist on the WSJ’s editorial pages and, therefore, a mostly conservative voice. I often don’t see things the same way, however this column is spot on. Why are all Republicans remaining silent in the face of the myriad ways that Trump and his family are using the power of his position for personal enrichment? They couldn’t stop talking and holding hearings about Hunter Biden and yet now…well, Ms. Noonan lays it out succinctly and more eloquently than I could.
Finally, I do not want to overlook the fact that it is Memorial Day weekend. The holiday originated in the aftermath of the unbelievably tragic Civil War and has evolved to include the fallen from all conflicts. Unfortunately, these losses persist to this day, as do wars the world over. In this, I am in total synch with Donald Trump…it is way past time for the world to find better ways to settle disputes than conflicts and killing. Wars are a waste of lives and resources. We need to do better.