Here's the Deal - April 6, 2025

Economy: In Slowdown

Market Cycle: In Correction. Confirmed Bear Market

_{Week 14 of 52 for 2025: 26.92% of the way through 2025}

Welp. It’s officially that market where even the best-laid plans will be disrupted this year. This thing is getting real serious, real quick. This isn’t something to take lightly.

As you’ll see below, I spent much of the weekend digging deep into the tariff and trade plan now that its been unveiled.

But as I was about to finish up the market update, I checked stock futures and they are down about 5% from Friday. So we may need to jump around a little in the coming days as some changes, whether it’s people or strategy, are definitely going to be needed from the Trump Administration quickly.

The one thing which I cannot stress enough right now, especially for Trump supporters, is that deficits are not entirely bad or the worst thing in the world. Many times they are simply necessary because of the gigantic size of the US economy and some of our trading partners which are small or developing countries. That was covered a little more in depth in the Tariffs post. But the US, more than anything at the moment, needs Trump’s supporters to send him the message that negotiating to equal trade across the board is a sure fire ticket to a possible global depression. Meaning the result would harm the US much much more than inaction. That’s a bad trade. Terrible risk/reward on that one. Best to stay away from those types of wagers.

So, just to make sure we’re clear: Deficits are not all bad and negotiating with the sole intent of eliminating them is a terrible foundation on which to lay a new world order of trade. In fact, tell everyone. We all need to know that right now.

It’s going to truly be wild the next few weeks.

The vast majority of the rest of this post was written before futures opened down 5%, with the exception of some of the market information.

But first, right as I’m about to post, a new development. Bill Ackman has now called out Secretary of Commerce, Howard Lutnick, over his firm being “levered in fixed income”. Meaning if he fails at his job and thereby sends the economy into a deep depression, his firm will make a nice profit.

The sleaze and mudslinging factor is already escalating as it began earlier in the day with Elon Musk calling out Peter Navarro’s outdated views on trade policy…

Weekly Note:

In 100 years, when history looks back at key moments which defined the century, they will point to this past week and the coming weeks as one of, if not the most, significant turning points which defined the century.

That may sound dramatic to some, but not for those of us who’ve spent years studying history, economics, markets, and generational behavior patterns.

For now, the priority is clear: focus on the dramatic changes unfolding in the U.S. and global economy as these changes are laying the foundation for the next 80 to 100 years.

Unfortunately, it’s off to a rocky start after bad communication and a botched roll out of US Trade policy.

Over the weekend, I watched and rewatched interviews from Howard Lutnick, Peter Navarro, and Scott Bessent, taking extensive notes. Their words do reveal a strategy. Maybe not a fully refined one, but it is traceable. By breaking down their arguments we can uncover what they’re really aiming for, how they’ll define success, and how they’ll attempt to sell that success to the public and markets.

This evolving strategy is now the dominant economic and market narrative. It has officially replaced the AI and semiconductor-driven story, which, as we covered here when it happened, came to an end with DeepSeek’s announcement. Bessent echoed that confirmation this past week as well.

Part of this process will be finding ways to track real, objective metrics that show whether this new strategy is truly working and to what extent. The framework will focus on outcomes that benefit the greatest number of people, both here in the U.S. and around the world. Why? Because by not not doing so, we run the risk of less national security and increased odds of a hot war in the not too distant future.

The goal here is to build a clear, evidence-based way to measure what’s happening, grounded in the actual messaging and intentions of those rolling out these policies, and not filtered through the lens of journalists or political operatives with no real economic track record.

Let’s Talk About the Tariff Announcement

Now, before we move forward, let me be honest about my initial reaction to the tariff rollout on Wednesday:

My view hasn’t changed since I posted it Wednesday day night, as it was a disaster.

A complete communications failure which has the makings of being one of, if not the worst policy errors in a century.

Whoever was in charge of that needs to be fired or demoted. I don’t say that lightly as in general I believe most screwups are chances to learn and grow. But this one was too important to get wrong, and the administration missed badly.

I’ll explain why later as we walk through the full timeline. But I want to be clear upfront: my criticisms from Wednesday still stand. However, after digging into the commentary from Bessent, and to a lesser extent Lutnick and Navarro, I’m slightly less pessimistic about the broader plan than I was midweek. That said, the announcement itself was still deeply disappointing. (Unless you believe it was intentional which we will also get into later.)

What to Expect from Here

It’s going to take a few posts to fully unpack everything: the strategy, the players, the implications for markets and the economy, and how to track the plan’s progress in real time. So, stay tuned and don’t miss a post as this may very well end up laying the foundation upon which the world economy will operate for the next century.

Yes, it is that important.

If you stick with it, you’ll come away with a clear view of the full picture. Whether or not you agree with my conclusions.

The best way to approach something this important is with an open mind, and a commitment to evaluating facts, not clinging to political loyalties. Nothing distorts economic thinking more than rooting for a specific outcome and then seeking out only the data or narratives that support what you want to believe.

This kind of confirmation bias is a trap, and it's one that even seasoned economists fall into. Over time, some become more like activists than analysts, because their work starts to revolve around defending a belief rather than discovering the truth. That shift usually begins when they stop testing their ideas and start building on flawed assumptions.

To stay sharp and objective, you have to be willing to follow the evidence. Even, and especially if it challenges your preferences or prior convictions.

With that, let’s start by looking at how markets responded to Wednesday’s announcement, because it was, to put it bluntly… U.G.L.Y. Ugly.

Markets:

While it is true that the stock market is not the economy, this statement is what is know as a “specious argument”. As it appears to be correct on the surface, but in actuality is incorrect.

The complete truth is that the stock market plays a very large part of the entire economic system. More importantly, the stock market is a forward looking metric. This is a major reason why the vast majority of retail investors (you and I) do so poorly investing and trading. We tend to make decisions based on what is happening at the present, but by the time it is felt by the masses, the stock market begins to move onto the next new thing or two.

So while it may feel good to chuckle, smirk, and say “Well, Bob. The stock market isn’t the economy. This is just Wall Street’s problem.” The truth is, markets offer insights into what to expect next in the economy in the coming months. It can be used as a tool to help you make more informed major decisions, so why not use it?

The stock market may not be the economy, but it has a great track record of telling you what’s going to happen next.

I point this out because this has quickly turned into one of the fastest and most severe market downturns in history. This is a new bear market and it looks more like it is just beginning than close to coming to an end.

At the same time I see The Economy Tracker had enough metrics change to push into the Recession phase, as it had been close at the end of the past two quarters. So, I’ll be updating that in the near future as well.

$SPY ( ▼ 0.21% ) S&P 500 (-17.64% from All-time Highs as of Apr 6, 2025)

Markets have been obliterated since Wednesday afternoon when President Trump’s tariff/trade plan was first announced.

$DIA ( ▼ 0.32% ) Dow Jones Industrial Average (-15.12% from All-time Highs as of Apr 6, 2025)

$QQQ ( ▲ 0.05% ) Nasdaq (-22.73% from All-time Highs as of Apr 6, 2025)

$IWM ( ▼ 0.03% ) Russell 2000 (Small Caps) (-26.08% from All-time Highs as of Apr 6, 2025)

There is nothing that markets and economies dislike more than uncertainty, and the entire global market is currently awash in uncertainty.

While I expect a solid bounce this week, the problem is that so does everyone else. And the market almost never does what most people think when they think it. So this already severe downtrend, may have to get much worse before it starts getting better. Whether that happens through time or price remains to be seen.

This has been a very sharp reaction and has very quickly become quite concerning. Markets were just at all-time highs in January. While the initial phase of the correction was revealing, it was not overly concerning until the reaction to the tariffs.

Everything changed Wednesday afternoon.

Hopefully level heads will prevail.

You’re going to want to keep an eye on how this develops. There is a high likelihood that much of what happens in the coming decade(s) will emanate from how this transpires and ends up being resolved.

If you want real time market updates, you can follow me here through my StockTwits account.

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We’ll work through this. We always do.

Significant Economic Data from the previous week:

Economic Data to watch this week:

Quote of the Week:

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