Good morning! Turns out the trade war really does come down to US-China negotiations. More reporting below. Was this email forwarded to you? Join 190,000 self-directed investors and sign up here. 

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Hair-trigger markets

Stocks in the “Liberation Day” era seem to make history every other trading session.

On Wednesday:

The rally followed President Trump’s announcement on Truth Social that he would pause some of his global “reciprocal” tariffs for 90 days, capping tariffs for most nations at 10%.

In the same post, the president said he would raise tariffs on China to 125%

“At some point, hopefully in the near future, China will realize that the days of ripping off the U.S.A, and other Countries, is no longer sustainable or acceptable,” Trump wrote, reinforcing the suspicions of many that his tariff agenda is primarily targeted at Beijing.

Since the Wednesday “Liberation Day” press conference, volatility and all, the S&P 500 is down 2.8% — effectively a rounding error in the seemingly dire barrage of headlines. 

To Gene Goldman, chief investment officer for Cetera Investment Management, the market reaction signaled a sudden surge in risk appetite, noting that growth stocks outperformed value, while cyclical sectors outpaced more defensive ones.

“The Trump administration was able to resist the equity market sell-off for some time, however, once the bond market fell — yields rose — it was a clear signal that financial markets were under too much stress,” Goldman told me.

Now, to the concern of some market-watchers, President Trump published an oddly timed Truth Social post three hours before his tariff delay.

Given the timing and subsequent historic rally, it makes sense to reconsider those words with suspicion.

Even if we give Trump the benefit of the doubt, it doesn’t make it any better that the leader of the world’s largest economy is teetering along lines of market manipulation.

And yet markets, in any case, did not seem to mind.

Following the big announcement, Treasury Secretary Scott Bessent suggested at a press conference that China shouldn’t have retaliated to the initial salvo of tariffs.

“You might say he goaded China into a bad position,” Bessent said. “They have shown themselves to be the bad actors and we are willing to cooperate with our allies and trading partners that didn’t retaliate.”

Indeed, after the news, economists at Goldman Sachs walked back their earlier recession forecast, and a number of strategists and executives across Wall Street responded with optimism.

But what happens after 90 days? Chris Marangi, co-investment chief at Gabelli Funds, said it will still be difficult to roll the clock back from this point.

“The odds of a recession are probably lower this afternoon than [Wednesday] morning, but they’re certainly higher than they were a week ago,” Marangi said.

Investor confidence and the predictability of policy, in his view, is still on shaky ground.

“The Trump put actually might have been triggered by what happened to the bond market,” Marangi added. “This is not over by any stretch, it’s a pause, and we’re going to go through another three months of negotiations and rhetoric.”

Market snapshot

Elsewhere:

🛢️ Oil prices are creeping higher. Benchmark US crude hovered near $64 a barrel late Wednesday, up from the day prior’s $59.58. President Trump’s China tariffs puts oil demand at risk, according to some strategists, and that’s led many banks to cut their oil outlooks for the year. (WSJ)

🤝 Howard Lutnick says negotiations are coming. The Commerce Secretary said in an interview with Fox News that trade deals with countries won’t happen right away, but they are on the way: “We are going to cover a lot of ground in the next 90 days.” (WSJ)

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About me:

📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

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