And for some reason, I don’t think America’s passive income gobbling investors understand just what the implications of that phrase really is. What is yours truly talking about? When one wakes up to a screen like the one below, it’s a nice jolt of reality that many of us expected but the average boomer retiree or 20 something RobinHood gambler did not.
Cash will be king today and right now these pages are looking not just for cash calls but dollar shortages in some of the Asian nations most heavily impacted by these tariffs as the realization that the US isn’t such a great ally sinks in.
While that might look like “yeah, that will teach them a lesson” most Americans are ignorant where things they buy all of the time originate from. The dirt poor nation of Bangladesh for example where the US spent a decade encouraging companies to relocate to from China now has a 37% tariff on it’s goods.
Why is Bangladesh suddenly important to the American consumer? Chew on this story:
US apparel imports from Bangladesh surge 27% in Q4 2024 despite unrest
So after all the cajoling to relocate to a poor company to take advantage of the cheaper labor and escape the Chinese mainland as relations deteriorated in the past decade, now the US is punishing those companies. Perfectly rational behavior, right?
No.
This means that the US consumer, who is clueless about the global supply chain, will now suddenly see common apparel at discount retailers and online sellers jump up in price dramatically. To add insult to injury, with the current inflationary cycle lit by Jay Powell and the yes, President Trump’s Covid panic reaction in 2020 with fiscal stupidity, American worker’s wages have stagnated further due the inflationary dilution of household income.
Good job idiots at the Fed and in DC.
Naturally the headlines are reflecting the drama this morning as last night’s shocking press conference begins to hit home.
The FT never disappoints and neither does the NY Post:
And Marketwatch points out what many of us expected would happen:
There will be an initial violent move when New York opens for trading but there is only one chart to watch and that is the flight to safety trade between the US Dollar and Japanese Yen:
The other area to watch is credit markets as the US 10 year yield is potentially broaching the 4% level and it is having ripple effects throughout the curve.
It’s about to become a long, long day so buckle up and make sure you follow RealJohnGaltFLA for updates on X (Twitter) throughout the day.
