Market When Closed, Tuesday 8 April

Last updated on Apr 8, 2025

Photo by Boston Public Library / Unsplash

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Zero Day

by Alex King, CEO, Cestrian Capital Research, Inc

Well, tomorrow the Administration’s reciprocal tariffs go into operation. As is now widely understood, the tariff rates themselves have been calculated on the basis of trade deficits, not upon actual inbound tariffs; and as regards China they have been escalated further since Liberation Day.

We're at the event horizon.

If these tariffs hold, I know of no independent economist who does not believe a US recession will be ushered in as a result. I also think that the Microsoft announcement today - cutting a $1bn capex commitment in Ohio - will be the first of many, with companies choosing to not invest due to the cost of capital in doing so vs. the uncertainty of economic outlook. This, I believe, will usher in a new bear market.

In the alternative, some set of negotiated settlements are reached such that the major players - the US, China, the EU - can de-escalate and get on with doing business. In which case cue a very large and rapid recovery in both equities and bonds, I think.

There’s not really much more to say; the outcome of the above is the primary driver of all markets right now.

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