Here’s what you’ll find in today’s edition:

• How tariffs rocked markets this week. 

• Check out the latest episode from the Forward Guidance podcast.

• Jobs data was surprisingly positive! 

Welcome to the Trade War 

Phew, it's been a week. Most people expected things to get worse before they got better, and they have, but we’re not calling this the bottom yet. 

Here’s a high-level recap, in case you’ve been offline the past few days or simply avoided checking your brokerage account (probably for the best):

President Trump this week announced sweeping global tariffs of 10% on all imports, and higher levies on 60 or so countries the administration says are the “worst offenders” when it comes to taxing goods the US exports. 

These higher tariffs range from 11% to 50%. Countries facing the highest tariffs include Cambodia (49%), Vietnam (46%), China (34%) and India (27%). You can find the full list here. 

His team calculated reciprocal tariffs on what they are calling the “total sum of all unfair trade practices” by country. Here’s the White House’s formula: a country’s trade deficit divided by its exports to the US multiplied by 0.5. 

The math has proven to be controversial. Critics say that this method, in focusing solely on a country’s trade deficit with the US, does not consider 1. The actual tariff rate on any product and 2. Non-tariff trade barriers. The White House conceded that there’s no perfect formula, but it’s the best they could do. 

The Trump administration also maintains that the reciprocal tariffs are still less than what other countries charge on US imports, and these policies are the first step in bringing manufacturing back onshore. 

Now for the impact: 

Stocks tanked, crypto fell, planned M&A deals and IPOs collapsed and other countries are striking back. 

The Dow Jones Industrial Average on Thursday, the first day of trading post-announcement, lost 1,679.39 points. The S&P 500 yesterday closed almost 5% lower, now down more than 12% year-to-date. US equities as a whole lost more than $3 billion in market value, the worst single-day since 2020. 

I wrote yesterday that the IPO window would be closing. Today, Bloomberg reported that StubHub, Klarna Bank and MNTN have all paused their IPO plans. Private equity firm KKR & Co. is no longer considering purchasing German packaging producer Gerresheimer. 

Today, stocks extended their selloff and the VIX hit a staggering level just shy of 44, well above the 20-day moving average of 21. The continued decline comes as China announced a 34% reciprocal tariff on US goods starting on April 10. 

Trump hasn’t backed down, although his team hasn’t definitively said they are closed to negotiations. I think the biggest concern for markets, though, is that other countries haven’t immediately come forward with offers (that we know of at least!).

For what it’s worth, Trump and company said things would get worse before they got better, too. 

Enjoy your weekend, the chaos will still be here Monday. 

— Casey Wagner

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Felix has Michael Howell on the show this week to discuss the tapering off of the Fed and Treasury’s hidden stimulus, why we need more liquidity in the financial system to refinance debts, and why the Fed’s QE and duration goals are unrealistic.

Enjoy!

Happy Friday! We already covered the tariff-fueled market turmoil from this week above, but there were also some notable (and decently positive!) economic reports. 

In case you missed it: 

• US factory orders rose again in February, increasing 0.6% month-over-month and coming in just above estimates of 0.5%. The figures come after January posted a revised 1.8% increase in orders. Analysts were unsurprised by the report, attributing the gain to businesses ramping up production ahead of tariffs.

• The US economy added 228,000 jobs in March, blowing the projected figure of 140,000 out of the water. Unemployment ticked up slightly to 4.2%. February’s job adds were also downwardly revised to 117,000. Sectors that added the most positions last month include health care and warehousing. 

• Fed Chair Jerome Powell on Friday gave no indication that interest rate cuts will come anytime soon. “The economy is still in a good place,” he said, speaking from an event in Virginia. He added though that central bankers will be keeping an eye on tariffs. 

— Casey Wagner