The Media's Piss Stain Starts To Dry

I can't help but laugh watching some analysts take their first deep breath in four days.

Over the last few days, I’ve been part of an extraordinarily small contingency of people not freaking out and losing their minds over President Trump’s new tariff plan or the ensuing stock market pullback.

A couple of days ago, I argued that the media shrieking hysterically about how the world was ending as a result of this trade policy was nothing more than a visceral reaction to what was happening in the stock market. It had to be. With just hours having passed since the implementation of Trump’s tariff policy, there was no real way to judge its success based on the merits.

Said another way, these things take time.

In an article late last week, I criticized Wharton PhD Jeremy Siegel—whose actual title is probably some bullshit with the word “emeritus” next to it—for coming out and declaring Trump’s tariff policy to be the worst policy decision in 95 years.

My argument wasn’t that he was wrong—only that it was too soon to make such a declaration.

Siegel was on CNBC again Monday this week. He started his interview by alluding to the idea that the Federal Reserve has room to cut interest rates—similar to the way he lobbied for an emergency rate cut back in August of last year. As the interview progressed, the stock market started to spike upwards on what we now know was a discredited headline about a 90-day pause in tariffs—and on live television, within the course of the five-minute interview window, Siegel had changed his tone, backing off his rhetoric and calling the now-debunked headline “terrific.”

It was proof positive that everybody—even supposedly well-adjusted, intellectual, seasoned economists—reacts first to the stock market and asks questions later.

I argued the same when the Wall Street Journal editorial board came out just three days after the implementation of Trump’s tariff policy and declared Xi Jinping as the “emerging winner” of this policy decision. Whether the policy works or not is one thing. But declaring winners after just three days just doesn’t make sense to me.

Today, we are witnessing the opposite: the market opened the day green, and the VIX is lower because—even though we have uncertainty about the future of these trade deals—at least the market knows that the giant shock of announcing the tariff to begin with has now passed. Everybody has been able to regain some semblance of footing, everybody knows where we stand now with other countries, and market direction going forward will be more of a prolonged response to how negotiations with other countries go.

With China being the obvious main holdout, it appears as though negotiations with crucial countries—like Japan, for instance—are already moving forward.

And so now that people in the financial media and “analysts”—who appear to get their pulse on sentiment from reading nothing but social media—are officially done pissing themselves, and the market has at least temporarily found some sort of point to bounce off of (even if it continues to eventually move lower again) their respective piss stains can start to dry, and we can move past the large shock of discomfort into the still uncomfortable, but less shocking, choppy waters of trade negotiation.

President Trump was right during his interview a day or two ago when he told reporters that sometimes you have to “take the medicine.” It is this outlook on big change being digested by markets that will help them find a bottom faster and get everybody on the same page of where we stand now—without worrying whether or not our end of the negotiating table is going to capitulate or make terrible concessions, which could actually wind up being counterproductive.

And whether or not you believe Trump’s policy is working, you have to give him credit for having the spine to stand by it. I know we have very short memories, but the fever pitch of people—media, citizens, friends, business leaders, analysts, and advisors even—who must have been begging on Thursday and Friday of last week to reverse course had no effect on an unwavering President Trump.

If you’re going to “throw a grenade in the room and then walk away” as a way of setting policy, you have to be 100% behind your decision—and for better or for worse, there’s no doubt Trump has dug in. As I said last summer, I don’t know why Trump is fearless, or what drives it, but I think it’s an asset.

People on financial media this morning are bright-eyed and bushy-tailed, congratulating each other for having the fortitude to endure such tumultuous volatility. Markets are green! Flowers are blooming! The worst is over!

And these are, of course, also insane proclamations. There’s still going to be a significant amount of volatility ahead, and to suggest that the market has bottomed here is, in my opinion, foolish. When the market is going up over long periods of time, it goes both down and up over shorter periods of time. When the market goes down over long periods of time, it makes lower lows and lower highs, going both up and down over shorter periods of time.

Doing something like proclaiming the Fed should raise or lower rates based on what the stock market is doing in one session is an extraordinarily irresponsible and dangerous way to set policy. Essentially, the entire global economy—representing $100 trillion in assets or more—hangs in the balance of what the Federal Reserve decides to do with interest rates. To watch an “economist” on live television change their tune and cavalierly throw out interest rate cuts and hikes in different directions over the course of a five-minute interview is insane.

But I guess that is only to be expected from financial media who can’t help but make the story of the day whatever the market is doing that particular day. Real market veterans know: one day, one week, or one month of pattern does not make. And I’ll give Jerome Powell credit: watching his interview late last week, I thought he spoke about the market’s reaction and the Feds ensuing plans with a steady hand.

Going forward, if there’s one thing to be adamant about, in my opinion, it’s continuing to ignore reactionary responses to every individual headline that pops up about negotiations. To me, it harkens back to how people were watching and trading the number of COVID deaths as they occurred, minute by minute, in real time.

Looking back now, it’s easier to paint with much broader strokes: you should’ve bought stocks on the crash in March 2020 and sold them recently when the Shiller price-to-earnings ratio nearly hit 40x. It wasn’t so easy to discern that on a minute-by-minute basis in 2020, however.

As the days, weeks and months pass by, order and trends will emerge from this tariff fiasco. This is why I don’t bother arguing about the formula the Trump administration used to implement the tariffs, nor do I argue about specifics. The point of the policy was to recalibrate our standing in the world of trade and that’s what it’s doing. We’ve made the message crystal clear, and we have postured accordingly. Already, nations are coming to the table to try and work through the problem. Trump himself said it right yesterday, proclaiming something to the effect of: “If this is done right, it will only have to be done once.”

As I’ve been saying, regardless of how trade negotiations go, I still believe the stock market to be overvalued based on historical averages. But this doesn’t mean that there aren’t bargains out there in individual names and sectors. When undergoing such a massive macroeconomic shift, capital is going to move, valuations are going to change, and the market is going to look different on the other side of this policy negotiation than it did before.

Taking a longer view, I think cooler heads are going to prevail, and by the end of summer, things will have calmed down significantly. So as for me, I’m going to keep my cool head. The hysterical media was acting last week like it was a guarantee this trade war was going to last 100 years. It’s been four or five days, and we’ve already got people at the negotiating table.

I’ll look for value if the market moves lower or higher from here. As I said before the tariff war even began, I believe the market could still fall 30 or 40% from here easily—towards the historical P/E average near around 16x earnings. And once the deals start getting consummated, then I will start to judge the effectiveness of the negotiating tactic that the President is employing.

I judge effectiveness by how and when these new policies will be implemented and whether or not they are a net positive for the country after the fact. So for me, the answers are still yet to come. But for the lot of individuals who use the stock market as their mood ring for the day, at least they have a day today to let that piss stain from last week dry up a little bit.

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