-25% Drop Coming | Wall Street FREAKING OUT at trump.

people are freaking out just listen to

this clip and then we'll get into some

of the reality of what's going on and

the bottom line of all this is that

we've only started this um we'll be

lucky if we get out of this top to

bottom only down 20% I think eventually

across the indices Dow S&P NASDAQ 100

will end up being down 25% before it's

all done it seems like on the daily

right now we're just getting more and

new tariff announcements and I think

that's sort of the echoing of what this

individual is freaking out about on CNBC

usually you don't see Wall Street folks

freak out like this unless they're Bill

Amman and have massive shorts going on

or they're losing lots of money I don't

know uh but let's actually break down

this latest sort of tariff announcement

from Trump is it that big of a deal let

look at the jolt report is it that big

of a deal is it really that bad and no

uh what about CPI and JP Morgan's

expectations for what the market might

do with CPI tomorrow we'll talk about

that we'll also look a little bit into

history what does history tell us for

the potential of um well outcomes on

tariff Warfare first let's look at the

jolts data I'm going to keep you give

you a simple explanation on this one

first you need to know that this jolts

data is January data which in my opinion

is frustrating why it takes six weeks to

get January dat it's CRA nobody knows

slow like the Bureau of Labor Statistics

anyway so it's January data 2/3 or sorry

uh 75% of this data basically came from

before Donald Trump was inaugurated so

it's not really useful at providing us

great insights but it did come in

slightly better than expected which is

good that's what we want remember we are

not guaranteed a recession I don't think

that the economy the stock market is

really pricing a recession right now if

you want to see pricing a recession look

at what the stock market was doing in

August of last year and where bond

yields were were in the opposite play

stocks are way higher bond yields are

way higher neither of these are

screaming recession at the moment

that could obviously change the big

thing that markets are responding to

right now isn't that data is slightly

good or slightly bad like tomorrow we

have the CPI report coming out uh we've

got you know construction uh job hirings

were stable in this report we saw stable

uh quit rates actually came in a little

better than expected we saw better

openings slightly better than expected

so overall joltz was great the problem

instead is that the market the stock

market is reacting to tariff news on a

daily basis so what happened yesterday

was Ontario and Prim the premier Ford of

of of the Ontario province in Canada uh

responded on Monday saying they are

going to now charge 25% more for the

electricity that they export to

Minnesota New York and Michigan now it's

worth noting that this is really

symbolic in my opinion in other words it

doesn't actually mean that much because

most energy doesn't come from Canada for

these states in fact New York only

Imports about 4.4% of its electricity

from Canada Minnesota and Michigan have

even smaller percentages potentially

less than 1% of their energy is coming

from Canada so in other words these

tariffs that Canada announced in my

opinion were really symbolic in nature

right it's a big headline look at the

headline the headline seems dramatic

Ontario slaps 25% tax increase on

electricity Imports to the US in

response to Trump's trade war and when

we see that we're like oh my gosh Canada

is escalating this this has like no

impact if 4% of your electricity comes

from Canada and you pay $100 a month for

electricity in New

York and that 4% goes up by an increase

of 25% that would work out to $4 25% of

that $1 a $1 increase on your $100

electric bill just as an example right

it could obviously be slightly different

depending on how it's charged how it's

passed on maybe it's a few dollars the

point is it's symbolic it's a message

from Canada or pissed well you know how

it goes when people piss off Trump and

so here's your response based on onario

C okay I'm not going to do that placing

a 25% tariff on electricity coming into

the United States I don't know why he

quotes electricity but I have instructed

by Secretary of Commerce to add okay

misspelled add there an additional 25%

tariff to to now 50% on All Steel and

aluminum coming into the United States

from Canada okay first of all we get a

lot of aluminum imports from Canada uh

as well as steel take a look at this us

aluminum imports from Canada dwarf all

other trading partners combin now uh a

ton of aluminum will go for like 24 4ish

hundred bucks uh so if you multiply 3.2

million in Imports by about 20 ah it's

actually 2573 is the current pricing

you're sitting about 8 billion dollar of

imports that now just

saw another 25% tariff which is worth $2

billion on top of the $2 billion

previously that's a lot that's just for

aluminum aluminum metric ton cost let's

just verify the cost of a metric ton

yeah okay cuz a a a kilogram sells for

about

$2.50 so yeah okay cool obviously this

fluctuates it's like a you know it's

like the stock market uh but then uh you

also look at steel Imports which you

could see here Mexico and Canada

accounted for almost 40% of us steel

Imports with Canada taking the Lion

Share uh of those steel Imports for net

tons so this you know is offsetting uh

the the exports that we do you can see

China way over here so this actually

hits them substantially harder I mean

6.6 million metric tons let's see metric

ton of Steel cost look up uh yeah metric

ton of Steel is sitting closer to about

1,000 bucks a ton so it's cheaper puts

you at about $6 billion from Canada

again now tariffed basically at a level

of $3 billion so these are significantly

larger tariffs in response to what

Ontario uh has has tariffed us when it

comes to electricity and so looking

further at Donald Trump's comment here

uh you can see that this will go into

effect tomorrow morning March 12th also

Canada must immediately drop their

anti-American farmer tariff on various

dairy products which has long been

considered outrageous shortly be

carrying a National Emergency part of

the reason we see other countries sort

of tariff like our Dairy at least is

because the US government does

substantially subsidize our own Dairy

Farmers because it's quite frankly

really difficult to actually make

money running a farm without the support

of the government also Canada okay we

saw that I will be declaring a National

Emergency on electricity within

threatened areas again we're talking

about like a dollar of a change here

this will allow the US to quickly do

what it can to to alleviate the abusive

threat from Canada it's basically trying

to say like hey go build more generators

solar Farms hydroplants whatever you got

to do screw Canada cut them

off if other egregious longtime tariffs

are not likewise Dro by Canada I will

substantially increase on April 2nd the

tariffs on cars coming into the US which

will essentially permanently shut down

the automobile manufacturing business

Canada mind you a lot of these are

American companies and American job

providers that have por of their cars

manufactured in Canada the supply chains

are very complicated it's not like 100%

of the car is manufactured there there's

so much back and forth trade for parts

for the chips the small microchips the

you know uh not even the smaller

nanometer chips I mean we're talking

about some of the larger nanometer chips

the 27 nanometers or whatever uh you

know almost more of like the chips that

you see in laundry machines these chips

go back and forth for testing Parts uh

you know uh capacitors from here it's

it's amazing how integrated uh the North

American Supply chains have gotten the

problem is sort of like cutting off all

those veins and trying to protectionist

or or apply protectionist policies to

the United States and that's why you're

seeing so much of a stock market shock

because every business is affected by

this

somehow uh those cars can easily be made

in the USA very difficult to turn around

snap your fingers and just open up all

the factories in the United States and

the supply Chains It's it it would be

almost to me it's almost like saying you

know what stop going to the grocery

store start growing your own food you

could easily grow your own food why

aren't you doing it well because it's

cheaper to have somebody else grow it in

bulk it's cheaper to manufacture in

another country the infrastructure is

already established anyway we're

subsidizing Canada the tune of more than

$200 billion a year why this cannot

continue the only thing that makes sense

is for Canada to become our chist 51st

state then we kind of go right back into

that which is interesting because then

it sort of leads into this I want you to

hear

the sentiment in Canada there's someone

who's trying to weaken our

economy yeah Donald

Trump Donald Trump and Donald

Trump as we know has put as the Prime

Minister just said unjustified tariffs

on what we build on what we sell on how

we make a

living he's attack ing Canadian families

workers and businesses and we cannot let

him

succeed and we won't we

won't I am proud I am proud of the

response of Canadians who are making

their voices heard and their okay so

this is really interesting this idea of

he's getting into uh Canadians

boycotting basically so this actually

happened in history has historical

precedent which kind of makes it a

little bit

scary because the outcome wasn't

great in 1930 Herbert Hoover signed what

we called the uh smooth Harley uh Holly

I always screw that one up tariffs and

they basically increased tariffs from

about 40% to 60% uh so 40% in 1929 to 19

uh to 60% in 1932 and tariffs really

started during the Roaring 20s mostly

because of after World War I Americans

had this mindset of oh you know let's

build it at home let focus on America we

just came out of a World War let's focus

on America and you did have a roaring

20s you had a boom after the war and so

that gave the might to issue tariffs and

more tariffs and more tariffs and more

tariffs problem is when you tariff in a

good time you get a little complacent

you tariff in a good time everything's

fine you start tariffing in a weaker

economy right I'm not saying we're in a

recession I know a lot of people say

know already in a

recession the data shows slowing

substantial slowing whether it's a

company pricing power earnings or what's

happening in the labor market signal is

slowing but a lot of these can also be

lagging right those really turn ugly

when a recession is actually ubiquitous

and everybody's like yeah we're in a

recession tariffs uh in uh you know

during the predecessor here to the Great

Depression ended up leading to this

anti-

American uh uh movement that to some

extent we're seeing now as

well in fact this uh oh they called it

they had a word for it here tariffs in

the 1930s contributed to exporting

anti-americanism which led to a drop of

15 to 20% of usual Imports to the United

States this ended up contributing not

necessarily leading to but it was a

contributing factor to the depth of the

depression that we had from from 1929 to

1939 that's a 10-year period of hell and

the tariffs were slowly scaled back we

actually went back to quote unquote free

trade in 1933 thanks to FDR but it was

too late you still had you you still

triggered the Great Depression you spent

four years with the Great Depression

starting and you were still in the Great

Depression for another 6 years after the

tariffs were

removed and the problem right now is we

don't really have a Federal Reserve

that's ready to fed put us see the fed

put is referred to this idea that if

things go really bad the Federal Reserve

will flip and and you know bail us out

and make everything okay again the

problem with that is we're not really in

a place where the Federal Reserve is

willing to say oh yeah inflation's an on

issue go ahead bailout

markets Federal Reserve instead saying

nah everything's good we don't need to

give you any kind of forward guidance if

anything goes poopy Dy will deal with it

at that time but will they depends we

got CPI data coming out tomorrow CPI

data tomorrow I think will be less

critical probably because I you I don't

think it's going to be a huge signal for

anything but this is February CPI data

we're looking AT3 for month over month

month over month core. three

year-over-year we're looking at 2.9

year-over-year core we're looking at

3.2 JP Morgan thinks that if we get a

Miss to the downside uh as in lower

inflation which technically and

inflation terms is would be considered a

beat uh we could actually see the S&P

500 move by as much as 2% uh I'll pull

up their comments in just a moment uh I

I I don't know that CPI much like jolt

stata this morning will be very useful I

think what would be most useful for

markets right now would be an end to the

terar for rapidly because the longer it

goes on the the longer you're creating

more sustainable pain uh and it just

compounds on itself uh that's how the

economy Works people get uncertain they

spend less money then all of a sudden

businesses are like my gosh we're we're

you know we're getting less income

what's going on oh no uh and and it's a

cycle the economy functions and Cycles

so uh the briefing that we have here we

go from

JPM

on CPI data let's pull that up for us

here we

go okay CPI so they think if we get a

0.1 n or lower on core we could rally

1.2 5 to 2% on the S&P 500 but they only

give that a 5% chance most likely they

think we're going to get something

between 0.24 and

28 and they actually think you'll go

flat to posit like slightly negative to

slightly positive on that uh and then on

either side you know they think we could

we could lose or we could gain a little

bit if we're on either side of that sort

of. 24 to 0. 28 level uh they they also

think there's a tail risk that could

really lead to some poopy doopy if uh we

end up getting a really high read which

would be not great uh this would be

somewhat similar to what we saw in the

first quarter of 2024 where uh we

actually had an entire quarter of higher

inflation reads that ended up leading to

longer uh longer pain in the market

through about April when we finally

started recovering a little bit rallied

then into July and that's when we

started having uh some labor market

weakness that really started flipping a

lot of opinions in terms so the the

direction of the economy so it's

interesting I mean we'll see what we get

tomorrow in CPI but uh as far as the

trade War continuing you could see you

know why did why did markets get hit

today uh well because uh Donald Trump

slapping some more numbers on I don't

actually think these these additional

tariffs are so substantial but they were

enough to shatter some of the early

morning run that you had here and they

do reiterate this tit fortat War that's

going on and it seems like we continue

to move towards more tariffs rather than

fewer tariffs and so that is enhancing

some of the uncertainty so anyway

there's your update for this morning

we'll see you soon with more information

thanks so much goodbye good luck can not

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congratulations man you have done so

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