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Trump's Tariffs Wipe Out over $6T on Wall Street in Epic Two-Day Rout

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Re: Trump's Tariffs Wipe Out over $6T on Wall Street in Epic Two-Day Rout

#121

Post by rsweeney21 »

csense wrote: post #12

So honest question: A bunch of people who currently own stock are deciding they'd rather have cash instead -- that much is obvious. But what exactly are they doing with the cash? Don't want to hold onto it, everyone says devaluation and inflation is coming. Bitcoin and gold are kinda flat. I expected them to shoot up as uncertainty hedges. What gives?

A lot of money is moving into treasuries, which is causing the 10 yr yield to quickly drop below 4%.

https://www.barrons.com/articles/10-year-treasury-yield-junk...

Re: Trump's Tariffs Wipe Out over $6T on Wall Street in Epic Two-Day Rout

#122

Post by eclipticplane »

huevosabio wrote: post #103
rtp4me wrote: post #24

On the bright side, this may be a good opportunity to convert 401(K) or IRA funds into a ROTH account.

Why?

You owe tax on the difference between contributed dollars and converted dollars. So if you contributed $100 and it historically had grown to $150, you would owe tax on $50 to convert.

If that $150 in value is suddenly $120 instead, your tax bill to convert is significantly cheaper.

Re: Trump's Tariffs Wipe Out over $6T on Wall Street in Epic Two-Day Rout

#123

Post by surfaceofthesun »

ijustlovemath wrote: post #18
csense wrote: post #12

So honest question: A bunch of people who currently own stock are deciding they'd rather have cash instead -- that much is obvious. But what exactly are they doing with the cash? Don't want to hold onto it, everyone says devaluation and inflation is coming. Bitcoin and gold are kinda flat. I expected them to shoot up as uncertainty hedges. What gives?

Inflation only happens if the US starts paying down the debt -- locking up the tariff money in interest payments. Otherwise, there's fundamentally no increase in the supply of money. I'm guessing there still will be inflation for consumers, especially seeing as most don't have the funds to invest in bonds.

I’m pretty sure the conventional wisdom suggests inflation happens when countries don’t pay down their debt.

Increased money supply isn’t the only cause of inflation (e.g., stagflation). Uncertainty about how to price goods—especially for goods in the middle of supply chains—could cause supply disruptions. It’s a self-inflicted version of the Covid supply disruptions.

Re: Trump's Tariffs Wipe Out over $6T on Wall Street in Epic Two-Day Rout

#124

Post by ein0p »

butterlettuce wrote: post #62
ein0p wrote: post #15

WAI. Trump is crashing the T-note yield to refinance $9T (which is how much US debt is going to mature in 2025) at a lower rate. That, for those of us who know arithmetic, is approximately one quarter of all US debt. It seems to be working.

Is that really what he’s doing? If so, then that’s some 5d chess right there.

It's 1D chess, really, and it isn't really Trump who came up with the idea. We're between a rock and a hard place. If we refinanced at 4.8%, the interest payment would go to $1.2T per year. If we refinance at a lower rate, it's lower. Note that we're not just refinancing either, we'll have to borrow about $1.8T, too, unless DOGE miraculously achieves its $1T/yr savings (doesn't look like it will, if the current trends are anything to go by). Tariff revenues would help to plug that hole somewhat. Then there's the issue of many countries having higher tariffs for our stuff than we have for theirs. That's not "free" trade. Then, finally, there's the issue of the near-irreversible erosion of the industrial base.

Warren Buffett warned about this back in 2003, and proposed an elegant solution, which, unfortunately, would require Congress to implement it through legislation: https://faculty.washington.edu/ss1110/IF/Buffett%20Fortune%2... But we do not have a functioning congress, so Buffett's solution is impossible.

Re: Trump's Tariffs Wipe Out over $6T on Wall Street in Epic Two-Day Rout

#125

Post by joshuamcginnis »

huevosabio wrote: post #103
rtp4me wrote: post #24

On the bright side, this may be a good opportunity to convert 401(K) or IRA funds into a ROTH account.

Why?

ROTH contributions grow tax-free. Doing your conversions now allows you to buy equities are they're currently discounted prices, maximizing your potential long-term tax-free gains.

Re: Trump's Tariffs Wipe Out over $6T on Wall Street in Epic Two-Day Rout

#126

Post by VirusNewbie »

lenerdenator wrote: post #4

I was looking at used cars on Carmax about two or three weeks ago. I looked again today. They're another $1-2k. This is the shareholder/political class trying to eat their cake and have it too. Pay people a stagnant wage for 40 years while taking most of the surplus value and dedicating it to equities, then pretend to do something about it, but in a way that passes the buck to the people who have been making a stagna…

Are you claiming that the 'shareholder class' would rather depress the economy and wipe out trillions in shareholder value...over inflating the economy and lowering interest rates?

Re: Trump's Tariffs Wipe Out over $6T on Wall Street in Epic Two-Day Rout

#127

Post by Terr_ »

darksaints wrote: post #95
bdelmas wrote: post #32

Earlier quoted context omitted.

I think that those in command are also waiting for the next President to undo all that but it is going to have a tremendous effect for a decade or more. Hopefully for the US they won't go in a similar crisis like the UK is going through... Cutting off countries like Japan or Taiwan like that when we know their geopolitical situation with China and how critical their economy is to the US is quite crazy.

This. There is no reason why any country should trust us anymore if entire trade relations can be destroyed by a presidential whim. Even if Trump fell out of a window today and we got a pro-trade president tomorrow, we’re not fixing this damage for a very long time. We probably would have to amend the constitution to insulate foreign policy from the whims of a single person if we want any chance of fixing this in our…

It doesn't require a constitutional amendment, we can just repeal the law [0] being used, which would ironically involve the same number of votes as keeping the law but slapping down Trump's particular usage of it. (That's now how it originally worked, but the easy-slapdown route got ruled unconstitutional.)

Military alliance stuff might be harder. Some stuff like NATO is supported by actual legislation, but other stuff was set up as a kind of gentleman's agreement with the US President-du-jour on the assumption that successors wouldn't be crazy.

[0] https://en.wikipedia.org/wiki/International_Emergency_Econom...

Re: Trump's Tariffs Wipe Out over $6T on Wall Street in Epic Two-Day Rout

#129

Post by itake »

csomar wrote: post #101
ripped_britches wrote: post #69

Earlier quoted context omitted.

Financial markets are generally better indicators of overall sentiment than betting sites but point taken

The betting site did predict Trump will win the election.

The crypto betting site users had high sentiment trump would win

Re: Trump's Tariffs Wipe Out over $6T on Wall Street in Epic Two-Day Rout

#130

Post by energy123 »

fulladder wrote: post #5

Not going to comment on the politics, but I'd point out that recession odds on Kalshi are currently 64% and 58% on Polymarket [1,2]. In other words, recession in 2025 is more likely than not -- though far from guaranteed. My thought relevant to HN is that either way this is likely to decimate venture capital and startups, at least in the short run. Venture capital funds come from limited partners like pensions and en…

This is basically 1 - P(tariffs get repealed).
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