From Strategic Retreat to Full Retreat

Posted on May 16, 2025 by MN Gordon

The Great Trade Tariff Saga of 2025 continues…

On Monday, in a joint statement from Geneva, it was announced that the United States and?China had agreed to a 90-day pause on the?tariffs they had put in place over the last month. In the interim, they are, “Moving forward in the spirit of mutual opening, continued communication, cooperation, and mutual respect.”

What exactly this means, no one knows. But it sounded good. And it gave investors a ‘warm and fuzzy,’ which is exactly what they needed.

For practical purposes, U.S. tariffs on Chinese imports will be cut to 30 percent from 145 percent, and China’s tariffs on U.S. imports will be cut to 10 percent from 125 percent.

Wall Street celebrated the news with concerted buying. On Monday, the S&P 500 closed the day with a 3.26 percent gain and the NASDAQ finished with a 4.35 percent gain.

How pleasant. The Liberation Day dip has been vanquished. The S&P 500 and the NASDAQ are both back to where they started the year. Continue reading →

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Suffering the Fed’s Mistakes

Posted on May 9, 2025 by MN Gordon

This week, Federal Reserve Chair Jerome Powell and the Federal Open Market Committee (FOMC) held the federal funds rate within the target range of 4.25 percent and 4.50 percent. Balancing the risks of higher inflation and higher unemployment, and the uncertainty of “which way this will shake out,” was Powell’s stated rationale for the decision.

This made President Donald Trump grumpy. He wants Powell to cut interest rates. He wants lower borrowing costs to help cushion the fallout from his trade tariff policies. In advance of the FOMC meeting, Trump even called Powell mean names on Truth Social:

“There can be a SLOWING of the economy unless Mr. Too Late [Powell], a major loser, lowers interest rates, NOW.”

Lower interest rates would help Treasury Secretary Scott Bessent cover the $1.07 trillion in government debt that must be borrowed between April and September. Lower interest rates would also promote a weaker dollar, which would make American made goods more competitive in export markets. This would be consistent with Trump’s objective to bolster American manufacturing. Continue reading →

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Triggering the Dollar’s Fateful Demise

Posted on May 2, 2025 by MN Gordon

Terror. Confusion. Regret.

These must have been the thoughts and emotions that raced through Gary Hoy’s head as he rapidly fell towards the street below.

Moments before, the 38-year-old lawyer at the Toronto law firm, Holden Day Wilson, had been standing in his 24th floor office. Hoy, who also had a degree in engineering, specialized in building safety and compliance. His academic training had instilled an unwavering faith in the unbreakable nature of his office’s floor-to-ceiling glass.

To demonstrate the strength of these windows, and the robust safety codes they were designed to, he frequently threw himself against them. This stunt was always greeted with gasps and cheers.

On July 9, 1993, Hoy was giving a tour of his office to a group of students. After detailing the rigorous design and safety standards of the windows, it was now time to teach his students a valuable lesson. Like many times before, he took a running start and hurled himself against the glass. But then the impossible happened… Continue reading →

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Make Depressions Great Again

Posted on April 25, 2025 by MN Gordon

Trade tariff policies continue to drive uncertainty in financial markets. Stocks, bonds, and the dollar itself move to the daily words of Team Trump.

Are extreme tariff policies one of President Trump’s ‘art of the deal’ tactics? Or is the ground shifting beneath the feet of the global economy and financial markets?

This week, to the stock market’s delight, was all about damage control. Treasury Secretary Scott Bessent, while delivering remarks at the Institute of International Finance Global Outlook Forum, clarified that “America First does not mean America Alone.” This came a day after Bessent stated that the ongoing tariff showdown against China is “unsustainable” and that he expects a “de-escalation” in the trade war.

When you play with fire, you’re gonna get burned. In this regard, the initial damage has already been done. But, of course, there’s always more to come.

According to Port Optimizer, scheduled import volumes for the Port of Los Angeles for the week ending May 3 show a 28.53 percent week-over-week decline. What’s more, for the week ending May 10, scheduled import volumes are projected to be down 34.54 percent year-over-year. Continue reading →

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