Fall Down Friday – China Strikes Back With 34% Tariffs on ALL US Goods!

Who needs who more?  

As President Trump heads off to play golf, China remains at work, swiftly (instantly) retaliating against US Exports ($150Bn) with a 34% ($50Bn) tariff in response to Trump’s 54% (20% “Fentanyl Penalty” plus 34% newly announced) tariff on $450Bn ($243Bn) Chinese goods.

Of course that means China is taxing their people $50Bn if they continue to buy high-priced US goods (spoiler: they will not) while the US consumers will be penalized $250Bn if they continue to buy low-priced Chinese goods (spoiler: they will) and, already this morning, the VIX is at 40 and the Futures are down another 3-4% (so far).  

This is a “Long Squeeze” which is the opposite of a Short Squeeze in that too many people were long (not our Members, thank goodness!) due to ostrich-like behavior in which they ignored our continuous warnings not to be (see: “PhilStockWorld Q1 2025 Review – Making Sense of the Market Madness Before Taking our Next Step“) and now we are getting the 20% (total, HOPEFULLY) drop we expected since last year. In fact, here are our bounce chart predictions:  

The Nasdaq and the Russell, who were our leaders going up are now our leaders going down – breaking below a 20% correction from their Nov/Dec highs – when they were all so happy that Trump was elected (and weren’t we all?). It is still Lent (through April 17th) and I have promised not to pick on President Trump because people said I was being too mean and not giving him a chance to ruin the country so – challenge accepted!  

Don’t be deceived by our S&P chart either as it’s the BLUE line at S&P 5,000 that is our base for the S&Ps valuation BUT that was WITHOUT this F’ing madman’s Trump’s tariffs which are not just ensuring runaway inflation and a Recession (Stagflation for short), but are also bringing the end to the Renaissance of Global Free(ish) Trade that has been driving the economic boom we’ve been enjoying since the 1990s – literally over Ross Perot’s dead body! (he got 19.7M votes in the 1992 election)

And don’t be fooled by the red line on the S&P at 5,396 as China’s rebuff already has the Futures down ANOTHER 180 points so we’re already at the weak bounce line at 5,200 and look how close we are now to forming a DEATH CROSS where the 50-day moving average goes below the 200 dma, which is a powerful technical signal for a downtrend AND don’t forget what I’ve been saying: Those RSI and MACD readings aren’t going to save you because the FUNDAMENATALS (no tariffs/tariffs) have DRASTICALLY changed – which renders those indicators meaningless.  

Sorry, I needed a break – this stuff is kind of intense, isn’t it? “When the truth is found to be lies, And all the joy within you dies. When the garden flowers, Baby, are dead, yes and Your mind, your mind is so full of red. Tears are running, They’re all running down your breast And your friends, baby – They treat you like a guest. Don’t you want somebody to love? Don’t you need somebody to love?”  

HOPEFULLY (not a valid investing strategy), we will bounce off those -20% lines on the Nasdaq and Russell (taking the other indexes up with them) and 5,200 on SPX should be bouncy too and all it will take is a good jobs report and a soft word from Powell and HOPEFULLY – we won’t be looking at a total disaster into the weekend.  

We did pick 11 good trade ideas for our Members yesterday, stocks that should be tariff-resistant and, depending on how early earnings go over the next two weeks, we will have to see which sectors seem to be freaking out and are likely to have trouble making adjustments but let’s look at a few things that are probably oversold already like:

• • Mircrosoft (MSFT) is down to $359 this morning and that is just $2.77Tn, down from $470 ($3.62Tn) in July. MSFT does/DID expect to make $100Bn this year so 27x earnings but 10% annual growth is about right for them and are you not going to renew your Windows subscription because it is tariffed higher? Are companies not going to need cloud services next year? And who doesn’t love Bing? MSFT will survive and we’ll be adding it to our Butterfly Portfolio – looking for a slow, steady recovery.  

8:30 Update: Non-Farm Payrolls are up 228,000 jobs for March, 57% better than 145,000 jobs anticipated by Leading Economorons – hazzzah, we are saved! No, just kidding but it felt good for a second, didn’t it? February was revised DOWN from 151,000 to 117,000, wiping out half of this month’s net gain and Average Hourly Earnings are up 0.3% so still lots of wage pressure – which ties Powell’s hands re. rate cuts (and our Leading Economorons are now predicting 5 rate cuts this year somehow). 

Unemployment is still 4.2% (was 4.1%) but the Average Workweek has been revised in April from 34.1 to 34.2 hours, which is another indication of wage pressure as that is like stealth hiring 165,000 people by taking more hours on the 165M working people we already have.  

Since we KNOW that DOGE has been cutting and gutting Government jobs – we can expect the April Report to start turning ugly. Also starting to turn ugly is a wave of anti-American sentiment around the World that feels completely betrayed by Trump and his policies which, don’t forget, only serve to back up his hateful rhetoric.

Trump has certainly NOT been speaking softly and, on Wednesday, he pulled out his big stick in a unilateral first strike against allies and foes (but who knows which is which and who is who?) who, by the way, buy $8.2 TRILLION worth of goods that are NOT considered exports from US Companies who manufacture and sell overseas (the same way Honda builds cars in Georgia).   

If you took into account the $8.2Tn worth of goods and services American companies sell overseas, the US would be considered to have a MASSIVE Trade Surplus, which would make Trump’s actions seem like absolute MADNESS that could only serve to harm the US – turning the United States into a Global pariah in a manner that could only possibly benefit Vladimir Putin who, by the way, is one of the only countries NOT being tariffed by Trump.

But, since it’s still Lent, I’ll say it’s just a coincidence…

Have a great weekend, 

— Phil