Weekend Reading #309

This is the three-hundredth-and-ninth weekly edition of our newsletter, Weekend Reading, sent out on Saturday 5th April 2025

To receive a copy each week directly into your inbox, sign up here.

*****

What we're thinking.

Wow what a week. As at time of writing the Nasdaq alone was down 10% in 2 days and counting never mind the rest. Nowhere has escaped the wrath of the Trump tariffs. And the maniacal responses from all and sundry on both sides of whatever issue one chooses to battle indicate to us how lost everyone truly is. For us, we simply reiterate that it doesn’t matter what anyone thinks. The Trump administration has been clear with what they want to do and they are doing it. We know what the intended consequences are but no one, including Trump, Lutnick and Bessent themselves have a clue what the unintended consequences may be. There are a lot of Trump derangement syndrome sufferers out there decrying what’s unfolding but importantly there are also many super bright and switched on people we deeply respect who are sounding the alarm bell at the potential unintended consequences.
 
What do we think? We have absolutely no idea but what we do know about is the market. And once again like we have said so many times, markets hate one thing more than anything else - UNCERTAINTY. Until this resolves either way, we are in a quagmire of displeasure for markets.
 
The GREAT ROTATION continues unabated although with the panic setting in globally, flows and liquidations take over so in the short term there is no guarantee anything outperforms anything else. In the mid-term, it is becoming increasingly clear to us that the GREAT ROTATION is more on than ever.
 
Good luck to everyone out there. We have closed our book and gone to cash after a most satisfactory few weeks and are going on holiday for a week. Don’t worry of course, we will be watching and waiting and indeed writing our beloved newsletter.

What we're watching.

Somewhat sceptically, I sat with the kids and watched the new Wicked film last week. And to my great surprise it was absolutely brilliant. I was expecting more virtue signaling and political nudges but was blown away by the film. The main part was played by Cynthia Erivo who was excellent as was Ariana Grande in her role. Proper fun.
 
On the plane over from London to Cape Town I had a choice of many new movies but I decided to watch the first Lord of the Rings again after a 20-odd year break. It was majestic. They simply do not make movies like this anymore. Peter Jackson was true to the source material from Tolkien and everything was just perfect. My new discovery is movies I watched 20 years ago and remember enjoying but don’t remember the plot too well. As I think I wrote when I watched Gladiator again, it is like recommending a movie to a different version of myself. DC

What we're listening to.

Speaking of recommendations, I listened to a great podcast - some guy called cultural critic who runs a YouTube channel reviewing films etc. He was superb and I loved it. In fact, that’s what made we watch LoTR again. He chatted to Chris Williamson on Modern Wisdom. They spoke about why films are not as good as they used to be. They covered Marvel and his negative prognosis for it as well as what on earth happened to Star Wars and if it can recover. Highly recommend!  DC 

What we're reading.

 
To work out what the money’s doing, follow the money trail. And the money trail seems to be heading out – according to this chart flagged up by @LizAnnSonders here, presented pretty much without additional comment:
 

Of course, many are upset given the era of easy money has pretty much come to an end. This isn’t to say that we can no longer make money from the stock market. Rather, it’s the end of the “set it and forget it” era of “investing”. As investors, we are most certainly not entitled to an up-only market, as much as it’d (presumably) make life a lot easier. And as we’ve written before, Trump v2.0 is not offering a put on the stock market (as in Trump v1). They’ve made it very clear that they want rates down, and Wall Street will readily be sacrificed in the near term, not only for what they believe to be the greater good, but also for the very imminent refinancing of a huge chunk of treasuries.
 
This thread breaking down the context for what the Trump v2.0 admin is doing clarifies things perfectly. There is method in the madness, and while risky, the truth is the status quo is so unsustainable that there are really not many alternatives, if any at all. The front bench of Trump v2.0 is pretty much the sharpest lot one could get for a government, even as many may feel tempted to disagree. They may be unorthodox vis-à-vis the intelligentsia, but it doesn’t make them wrong.
 
When it comes to intellectuals, the outcry around the calculation of the now-famous reciprocal tariffs table even got Bloomberg to post an opinion video from John Authers (formally of the FT, then Bloomberg) calling the tariff equation “nonsense”. Many others have mocked the formula, accusing the USTR of simply dumping data into Chat GPT and spitting numbers out.
 
Amidst the outcry, one of our old favourite Twitter accounts @BaldingsWorld (whose display name changes are chuckle-inducing at every name change) put out, in reply to the above Bloomberg Opinion post, a well-thought-out post explaining the well-founded logic behind this now-famous formula.  
 
Definitely method to the madness. EL