The Morning Brief Economist Chris Watling on Trump’s Volte Face and What it Means
Apr 11, 2025
In this engaging talk, Chris Watling, founder of Longview Economics, dives into the dramatic shifts in global markets following Trump's fluctuating tariff plans. He analyzes the recent stock market surge amid U.S.-China trade tensions and questions its sustainability. Watling also dissects Trump's unique negotiation tactics, especially towards smaller nations, and discusses the Federal Reserve's likely response to ongoing tariff uncertainty. Finally, he offers an optimistic outlook on the U.S. economy, suggesting that fears of recession may be overblown.
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Reasons for Tariff Pullback
- Trump's tariff pullback was likely influenced by market instability, particularly in the bond market.
- Concerns about systemic risk, voiced by figures like Treasury Secretary Scott Besson, likely pressured Trump.
Importance of Bond Market
- The US 10-year bond yield is crucial because it influences global financial models and derivatives pricing.
- Dysfunctionality in this market can trigger systemic risk and force liquidations, making it highly influential.
Influences on Trump
- Trump's tariff decisions are influenced by advisors like Peter Navarro and Stephen Mirren who favor aggressive tariffs.
- Opposing voices, including Treasury Secretary Besson and figures like Ken Langone, advocate for free trade.