The Trump Tariff Dump

I think you just have to remember that this is the market where you take profit very quickly. You get a little bit of a pop, and then you're out. You just shove it out. That's how I'm looking at trading this market right now. Honestly, I think getting short here is still—can you honestly probably short ETH at this point and get down to 1,500?

1. Happy Liquidation Day

And we're live. Happy Liberation Day, Avi.

Happy Liberation Day. Are you enjoying being liberated from your wealth?

Yeah. I feel liberated from my hopes, my dreams, my money, and my future. This is a pretty scary feeling, for sure. But I guess the whole point of these tariffs isn't to help out bros like us.

No, it's not. What I'm struggling to figure out is who exactly it's designed to help. What's really interesting is that we now collectively get to experience something that people haven't really experienced since World War II, which is a complete reimagination of America's place in the world and an upending of the world economic order to a degree that would have been unheard of 4 years ago, even 2 years ago at this point.

I don't think people took this tariff stuff that seriously from Trump. Even leading conservative voices are like, "What the hell are you doing, Trump?"

He clearly has a plan in his head. Hopefully, the tariffs aren't going to go into effect for another 4 days. I think April 6 and April 9 are the 2 major days that he put out in terms of implementation of tariffs, so we have a little bit of wiggle room.

I think what he's hoping for is that people are going to come out and say, "All right, we don't want to deal with this. We'll take our tariffs off, you take your tariffs off, and then everyone returns to a free-trade world." But for now, it's hairy. It's definitely very hairy out there.

I've been fairly quiet. I don't think I've tweeted in 2 weeks, because I haven't had anything interesting to say. This just goes back to the framework that I always discuss. Right now, the momentum is down, and we're not clearly at value levels because you have the equity market puking out below us, and you have altcoins sort of bleeding.

We're down about 15% from the highs on the Nasdaq. Maybe there's another 5% to 10% to go. I do think that BTC below 80 is a good buy midterm, but other than that, I don't really have any strong convictions in the market.

I do think we're closer to the end, just because what else is there to do at this point? But, yeah, what do you think?

Yeah, I think this may be the flush that marks the bottom. I think this is what you buy. I didn't really see this sell-off coming. You're not always right as a trader, so when you say, "All right, this is it. This is the time to buy," and you've said that a couple of times on the way down, there's a risk that your credibility is a bit damaged.

I have been recommending Bitcoin. I haven't recommended other alts, and Bitcoin's not really that deep in the red right now. We're trading where we were just a few hours ago. Realistically, on March 31, the lows were 81. Now we're at 83, so it's not really that crazy to buy this. I think Bitcoin is showing relative strength right now, and I think you're supposed to take heed of that.

Another thing is, having been a business person, I think it's a little bit shortsighted to fault Trump for the immediate impact of these tariffs. I can empathize with the idea of having a more nuanced, multipart strategy than just everything I say and do having to make the stock market rally that minute or that hour.

I can see a long game being played here where the tariffs are hiked, there's some pain, there's some contraction, other countries enter into negotiations, and ultimately what ends up happening is the global trade picture looks a little bit fairer. Tariffs come back down, and in the midst of the turmoil, the Fed has a little bit more scope to cut rates.

I don't think we're going to enter a crazy recession as a result of this. I think it's more the kind of situation that, as a markets person, you try to understand the rationale for rather than just feel annoyed about your static long portfolio. You know what I'm saying?

Yeah, I understand what you're talking about. There are 2 points I want to make here. One is that I think Trump could have played this as a long game a lot better. Coming out and basically saying, "I'm going to take on the entire world at the same time," is a little silly.

I think that was him trying to get things done too fast. If he had gone region by region, or even country by country, and tried to negotiate with them and used his stick to negotiate, it might have been a smoother ride. But I also understand that he does want there to be pain. I think that's part of the calculus.

With all that said, we know that he wants there to be pain, but we also know that he can't have too much pain because he's the stock market president. No matter how much they jawbone about not looking at the market and looking at the yields, I think they do care about the market at the end of the day.

That's also a barometer for how presidents are measured. We know this guy has a reasonably large ego, and if the market's down 30% to start his presidency, I think he's going to look at that and go, "All right, maybe I've got to fix this for my image."

You don't want to get elected and then immediately have the market nuke because of your policies. Then you kind of lose a mandate to govern because people lose faith in you, and he needs to avoid that situation.

With all of that said, ETH is basically—RWA alts are doing okay. They're just [__] across the board. There just won't be any buyers for these things at all until Bitcoin gets back above 90.

These things can have bounces, but they're straight-line lower until the VIX is down and the market relaxes. It's just a [__] [__] time to be an alt.

So are you saying that inverse alt season is still the new alt season?

Yeah, I'm saying inverse alt season looks honestly pretty damn good. But I've got my eye on a few things that I think could still do well if you just give them a little bit of time.

I've got my little RWA basket that I've been talking about, with the Pendle, Plume, and Curve of the world. I'm sort of waiting on good levels for them to start adding, and I'd be adding that against ETH because I do think these things are going to gain a lot of traction over the next year, just because of the regulatory clarity that's coming.

Other than that, I'm pretty much cashed up, waiting for spots to deploy because, you know, cash is the place to be. What was crazy about today is how badly the Wall Street Journal rugged the entire complex, including equities, because equities are down more than Bitcoin. Did you see this? Equity futures are down 3.2%, and Bitcoin's down 2.6%.

2. Will Tariffs Cause A Recession?

Yeah, I think some of that GME buying was good. Keep that up. But did you see that The Wall Street Journal came out with an article at 4 p.m. saying that the tariffs were going to be 10%, which was lower than estimates, and then everything just giga-pumped?

And then immediately it came out that that was false. Oh my God. It's crazy. The markets opened up today. I think everybody was expecting this to be a “sell the rumor, buy the news” kind of thing, and then Trump came out swinging.

I mean, what are the all-in tariffs on China now? Is it like 100%? Obviously, it's not. It's something like 50%. I think it's 54%.

Hold on. Let me just quickly check. One of my contacts is Ryan Petersen, who runs Flexport, and he was saying, “Remember, these duties that were announced are on top of existing duties.” So, for China, you have an original duty of 7.5% to 25% from Section 301, 20% from earlier this year, 34% today, and then he said 25% for China's purchases of Venezuelan oil.

That's over 100%. So it's 54% higher to buy Chinese goods than it was before Trump was elected, but there are still other duties floating around there. Some of these are savage numbers. I'd like to see a list of all-in tariffs.

And Avi, I want to get your take on this. My take is that I think consumption will drop as a result of this. Economics 101 will kick in, and higher prices will result in lower demand.

Ultimately, I think that, yes, everybody's profit margins will get squeezed, and, yes, prices of certain goods will be higher, but I don't think that people are just going to pony up and spend this extra money. I think it's really going to crimp consumption, which will obviously trickle down into other recessionary-type-looking data. What do you think? You're on mute.

I think you're right on that point. As we've discussed before, tariffs aren't just a tax on foreign goods; they're a tax on domestic goods as well. It's a tax on consumption in general.

Without wages going up, I think what we're going to see is actually a reasonably deflationary effect overall from this. One of the main reasons I think that is because, if you look at the levels of consumption, people earning more than $250,000 a year make up a much larger percentage of consumption than they have in the last 40 years.

With the stock market going down, those are the people who hold assets. I mean, I know just like me, I'm poorer today than I was yesterday, so I'm definitely going to be saving money a bit more. It's a natural thing, right?

Yeah. I'm looking at buying a house right now, and it's like, okay, how much money do I want to spend on a house? The answer is a little bit different today than it was—not actually, but you feel like, okay, maybe I should be a little bit more frugal now that I'm 15% poorer than I was 3 months ago.

I think it's funny. I think what got Joe Biden fired from his job wasn't the dementia. It wasn't the policies. It was just the inflation that occurred during his term. The Republicans are going to be subject to the same medicine if we have inflation. They're going to have to take the same medicine.

I kind of agree with you. While sticker prices on certain foreign goods will inflate, the overall impact of these tariffs on the economy will be a cooling effect. This won't heat things up or cause consumption. This is reverse stimulus.

Basically, what I think is coming next is a tax-cut package. They just introduced a massive tax on consumption, and now they're going to have to cut taxes somewhere else. Otherwise, they're just the people who hike taxes, which is not what they were elected to do, and it's not really their branding.

They're the tax-cut party. They always have been. So I think we should expect bullish-type news for crypto from here. If Trump manages to cut taxes to zero for everybody earning under $150,000, which is the plan, Bessent has gone out and said that, and Lutnick has gone out and said that—let's say they get close to that—that's pretty bullish for things that retail likes to YOLO, like crypto.

What gets worse from here before the stuff starts to get better? It's hard to imagine anything happening that's worse than this, and Bitcoin's holding up pretty well. I don't know. To me, the setup looks bullish.

Yeah, it's a good thought exercise. Whenever you have a narrative in the market that's causing fear, you have to ask, well, how old is that narrative? For a while, I think all of the bad news had been absorbed, and there wasn't new bad news to come, which is why we got a bounce for a bit—up until Trump announced this whole “Liberation Day” BS.

Then Trump comes out and goes, “Well, by the way, Liberation Day is coming soon. I'm going to be tariffing everybody.” I was like, “Oh, the market's like, okay, I guess that's new bad news. We can go back down.”

But now we're at a point where we're done again. We've hit all the bad news. The questions are: What are the knock-on effects? What are the ways out? And then what's more likely?

What do I mean by that? Ways out mean: How does this situation resolve itself? How does it get better? It gets better if Trump walks back the tariffs, if there's negotiation room, or if just nothing changes and data remains constant.

Both of us think that consumption is going to be hit. I think basically the only way that they avoid a recession is if they actually do manage to pass a reasonable amount of tax cuts. Otherwise, I think, by definition, it's very hard to see us not heading into a recession, which might be very possible.

They pass big tax cuts, and then the tariffs get removed, and then we go up in a straight line forever and always until the end of the Trump presidency. But he has boxed us into a little bit of a tough position here.

I mean, these tariffs are pretty extreme, Jonah. These are some pretty nasty tariffs. These are big ones.

I mean, put it this way, Avi: A guy in the chat says, “Why do you think there won't be a recession?” Let me respond to that and to what you just said.

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I don't think there will be a recession because, unlike every other flirtation with recession that I've experienced in my 20 years in markets, this is the first one that's intentional, self-inflicted, and predictable. Normally, it's shit out of left field. It's COVID. It's, oh my God, subprime mortgages. No one even thought about that until it was too late, or a flash crash, or all these random things that happened over the years.

This is the first time where a bunch of politicians, policymakers, and technocrats have gotten together and created a managed recession. Because this is man-made, the timing feels so obvious when you look at it that way.

If you're going to take some painful medicine—keep using this medicine analogy—you do it right at the beginning, when you're still on your honeymoon period and people are giving you a little bit of grace: your first 100 days. You don't just let this malaise continue into the midterms, get destroyed, let it continue another 2 years, and then get thrown out of office in disgrace, having not completed your agenda and having your legacy tarnished or destroyed.

No, you rip the band-aid off while you can, which is immediately, and then you start to rebuild the foundations that you were elected to rebuild. This is not a partisan comment. This is not me trying to defend Trump. I'm just reverse-engineering what's happening here.

The reason why I think that we won't end up in a recession is because, since this was created in an entirely manufactured, artificial fashion, it can be unwound just as easily. None of these tariffs are permanent; they can be unwound. None of this is creating a beast that the Trump administration can't control.

Foreign countries will always be happy to sell their goods to America, the world's largest consumer, at any price, tariffs or no tariffs. It's not like this is doing any permanent damage.

If we start to get into real trouble territory for the S&P, I don't think Trump is just going to stick it to the American economy. It's not just rich people who own assets. Businesses are assets. If everybody's stock price is in the toilet, hiring slows down, wages get cut, and people get fired. It's bad times.

Trump's not an idiot. The people around him, for the most part, are aware of these basic economic realities. So, in sum, because this is man-made, it can be undone just as quickly as it was done, and it probably will be if things get too detrimental. Maybe they will, but I doubt that this spirals into something crazy.

4. Is ETH Heading Lower?

Yeah. I think what you hope for is that it just doesn't spiral out of control, right? It's one thing—some things end up being sticky, right? For example, if there's a significant amount of job loss and that's what prompts everyone to be like, “Okay, fuck, now we're heading into a recession. We should probably reverse these tariffs or do something about it.”

Some of that stuff's sticky, right? Some of those jobs just won't be coming back. So there's a time limit on this sort of stuff. I do tend to err on the side of, yes, this is a flush and this will be over. A lot of people right now, in this moment, are pointing out that BTC is holding.

Basically, every single time I see the Nasdaq down a ton and BTC is holding, that just means there's a delay because there's an idiosyncratic buyer in the market. And this time, we actually know the idiosyncratic buyer: it's GME. So basically, what I'm trying to say is, don't put too much weight on that.

I'm not a buyer at $83K. I'm a buyer at $78K. I know that's 5%—it's not a huge difference—but if you're a trader, it makes sense, right? This is actually a phenomenal market if you want to trade.

All you have to do is trade at extremes. If you get $1 billion of liquidations, or if you get a 10% down day from ETH, or an 8% down day from BTC—which is very possible—that's a buy. That's like, all right, let's wade in and then sell some on the pop.

In this market, I think you just have to remember that this is the market where you take profit very quickly. Basically, you get a little bit of a pop, and then you're out. You just shove it out. That's how I'm looking at trading this market right now.

Honestly, I think getting short here still is—you can honestly probably short ETH at this point and get down to like $1,500. I feel like ETH is going to triple digits. Where does the Ethereum Foundation get liquidated again? I wonder. I haven't been following it. I don't know, but $1,200 or something was the rumor.

We're trading at $1,788 right now. That asset is just cursed. It's down 6%.

Yeah, totally cursed.

I can easily see $1,500 shortly in that thing. Even if BTC holds—if BTC holds the low but sells off to $77K—I think ETH is at $1,500 in that case. I would say lower than that, which is very possible.

Some puts are probably phenomenal here if you're worried about your portfolio, because this is the type of situation where you just have to be humble with your own skills and say, “I don't know what's going to happen.” This is a once-in-an-80-year event, and you should probably not take massive swings or do anything too crazy with your portfolio unless something truly nuts is happening in the market. A 3% decline in BTC today is not truly nuts. Yeah, that's my take.

5. What's Next For Markets?

Equally, in response to that take, if we get a flush, that's the flush that—let's say Bitcoin really flushes. Let's say it goes down to $75K. I would think it'd be crazy not to buy that.

What news is going to come out next?

With what money? You said you're all in cash, Avi.

I mean, yeah, but you've been buying the dips. I haven't blown my entire wad. Let's put it that way. I'm really careful about not blowing my entire wad. I've made some money on shorts. I've traded in and out of—

If you need a place to stay, let me know.

Jonah, buddy, it's over. Just throw in the towel.

No, honestly, I'm fine because I follow the advice that we give again and again on this podcast, which is: don't use leverage. Don't bet more than you can afford to lose. We're still above Trump's election levels. I was happy then, slightly happier now, just disappointed that we're not immediately mooning into his first 100 days.

I can see why the market-participant world is pissed at Trump right now. Let's just sit here and war-room this situation. What could happen that could make this worse? Let me just think of something crazy. Let's say China's like, “All right, we're just hiking our tariffs another 50%.” And then Trump responds by hiking tariffs on China by another 50%.

Now, suddenly, your cheap Chinese crap on Amazon is more than twice as expensive as it used to be, right? I guess that's the big risk. That's what you're afraid of if you're short, right?

Yeah, you can short altcoins with confidence. A lot of them are just going to zero. But Bitcoin or stocks—if you short those here, what are you hoping for? What are you hoping for? You're hoping for that, right?

Bitcoin is just going to follow equities at this point. So really, what you're asking is, what stops equities from going lower? Equities right now are just pricing in a reasonable contraction in GDP because of lower trade and lower consumption. At least, I think that's what's happening. And that is very plausible.

Here's the reality of the situation: We don't know what the fuck is going to happen with these tariffs. We can guess, but when's the last time that we had tariffs this extensive put on goods? There are arguments to be made that it doesn't matter, that a lot of this consumption is reasonably price-insensitive, and what it actually eats into is the savings of Americans.

I don't know; that's a stupid argument in my personal opinion, but it is an argument that you can make, because who the fuck knows when it comes to this. Maybe it produces American innovation. Suddenly, over the next 6 months, companies figure out how to produce the same slop at the right price because they're putting R&D into it. Maybe a bunch of companies build factories here.

Yeah, exactly. Like, who—genuinely, who the fuck knows?

But that's kind of the issue, right? The issue is that nobody knows. And with that in mind, the most likely outcome is that you do end up in a recession, because you do have a massive hit to consumption, at least in the short run. I think that's what the market is responding to. That's what everyone is so nervous about. You kind of need the ship turned around by stimulus in some way, right?

Yeah. And maybe that stimulus is coming. I don't think it's crazy to say that. I think it would be weird if the administration—they've been pretty open about how they're not just going to hike taxes and then walk away without doing anything else. This is all part of an extremely well-telegraphed agenda, most of which is relatively stimulatory.

No taxes on tips, no taxes on any income under $150K. We're going to lower income taxes across the board. We're going to give you bigger state and local income tax deductions. We're going to pump domestic manufacturing. We're going to move unproductive people in the government into productive parts of the private economy.

So again, if you're short right now, what are you hoping for? With all of the information that's been priced in today, lower earnings are priced in, lower consumption is priced in. We have perfect information on what happened in the past. What are you hoping for if you set a fresh short on Bitcoin and the S&P at current levels, when those 2 are trading with very high correlation? Right?

Yeah. I mean, what you're hoping for on BTC, I think, is like—okay, so I wish I could share a chart here, because—

All right, let me just finish the sentence. You're hoping that the government loses control of this. You're hoping that this spirals out of control and that, even if stocks are down 10% and the government brings the tariffs back down to zero, some beast has been let out of its cage that cannot be controlled.

That's what you're hoping for if you set a fresh short.

Well, hoping—I mean, betting on it. I think “betting on it” is better phrasing. Hopefully, you're not hoping for anything when you trade. On Bitcoin, if you go to the 3-day chart, it's actually such a clear short setup. From a technical perspective, you basically get to stop out above $88,000 and target the previous highs of $73,000.

So you have a 7% move to the topside and a 10% move to the downside. That seems reasonable, and you have the momentum on your side, which makes the risk-reward better. That just seems like a reasonable trade that a reasonable trader could take.

With the S&P, I think what you're betting on is a one-touch of 5,000, and you can get out. The way this is going to play out is that all of the fears are going to be front-loaded. This is going to end by Monday of next week. My personal opinion is that whatever price action is going to happen will get priced in by Monday of next week.

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We're going to get some move over the weekend, which is likely going to be negative if there's no change in the news, and then you get the flush on Monday, and then you're going straight up. That's my take, because, again, you need more bad news to come out. It can't just be the same thing over and over and over and over.

7. When Do You Buy The Dip?

That's what I'm saying. I couldn't agree more. I agree with Yuan Liu in the chat. SPX touching 5,000 would be a gift. What matters is the second derivative of the news, not the news that just came out, right? Is the news going to get worse from here or better? It's hard to imagine it gets worse.

I don't know. I tend to have a bullish bent because, over the course of my career—I started in 2007—there was the immediate global financial crisis, and then the stock market basically rallied in a straight line from 666 all the way up to 6,000. That's nearly a 10x-er. I've built my career over a period of time where, if I had been a perma-bear or even a perma-range trader on risk assets, I wouldn't have been able to sustain my 20-year career. I would've gotten blown out. So I tend to have a bullish bent.

But there's method behind the madness. It's not just that I grew up over a bull run, so I'm a bull. No, something very important happened in 2008—something game-changing, as important, I would say, as the US going off the gold standard in the 1970s. What happened in 2008 was that the United States of America, and governments around the world in parallel, decided to underwrite risk in the economy. That was sort of a first, and I don't think that genie can be put back in the bottle without stocks going straight back down to 666.

So I think that if things really get bad—which this isn't; having seen actual recessions and actual crazy sell-offs, this move in stocks from 6,000 to 5,500 doesn't seem that crazy to me—this feels totally tolerable. In Bitcoin, going from $108,000 for 1 unit of our magic internet money to $83,000 for 1 unit of our magic internet money, though, that's not crazy, right? If things get actually crazy, I think we're backstopped, and this just isn't that crazy.

Frankly, I think Trump was right to rip off this Band-Aid. Sorry—not right in the sense that I agree with what he's doing, because I don't necessarily, but his calculation that he could get away with it now will probably be proven correct.

Yeah. I think basically what you're trying to say is this will be a short-lived crash. This is not the destruction of an economic system that's going to take—in your words, it's not going to be 1 failure, then another failure, then another failure, then another failure. There isn't going to be a Lehman and an AIG; there's just going to be a cascade, and then we're done.

I tend to agree with that. I think the only thing is figuring out where we're done. That's what we've been trying to debate: when does the bad news end? Maybe what you're supposed to do is stay on the sidelines and then start buying good news when it comes out. When the administration starts doing things that are supportive of markets, then you can start buying. I don't know. You know what's done really well? Gold.

Yeah, $3,200. Gold is insane. Remember when the target for Bitcoin was a gold market cap of $10 trillion?

Mm-hmm. Now gold is a $22 trillion asset. I mean, gold is $30 trillion. That's just so insane, man. One-way train—just straight one way over the last year, just straight up. I'm glad I own a ton of gold.

You do? Why? I don't understand that one. I've never been a very good gold trader. I don't own gold in my investment portfolio. I own a bunch of physical gold. By a bunch, I mean I own a substantial amount of money in physical gold, but not a huge percentage of my personal portfolio is in this physical gold. My wife owns the gold in this family, not me.

I just think it's good. You never know when you're going to need it. Do you have gold bars, or are you just talking about earrings and wearables and stuff?

So I have a bunch of stuff that I bought from India—earrings, bangles, necklaces, all that sort of fun stuff.

I could see you and some of the other crypto nouveau riche guys in their late 20s and early 30s—you guys act like NBA players in their rookie season. I'm not going to name any names or dox anybody, but you're like, “Oh, yeah, I love the gemstones, the gold.” You're literally Kevin Durant in Uncut Gems.

Look, I'm on top of the game. What can I say? I like to treat myself.

It's true. It's better to have gold earrings than Fartcoin right now.

For sure.

Long story short for the listeners: bid Bitcoin when it's collapsing in on itself, preferably between $73,000 and $78,000, and just wait. Short Ethereum to 0. Buy some puts, then throw darts at your watchlist and pick any alt to short, and you should be happy—except for the RWA ones.

Yeah, I think some of these shorts—look at my favorite bellwether for shorts, the thing that's down the most on my entire board today. Can you guess what token it is?

Fartcoin.

WIF. Yeah, I was looking at WIF. WIF is down 12%. This thing is just the smoothest death spiral I've ever seen. It pisses me off that I closed my short at $1. I shorted it at $1.20. It went to $1. I was like, “20%, that's great.” Fuck.

I reset my WIF short. I closed it for a while, then I reset it because without a WIF short, I felt naked.

You know, sometimes when you have one of those positions that you take off and you just feel like something is missing. Feeling naked is one way to describe it. Another way is that something just feels missing in your life without that position. I kind of feel that way about the WAVE short.

Yeah, that's fair.

All right, dude. You ready to call it?

I'm ready to call it. Let's do another one later this week.

Yeah, let's record on Sunday like we usually do.

Record?

Yeah, we'll record on Sunday. We had to do something. It's an emergency stream for this crazy, crazy thing that happened.

All right. Adios.

Adios. Thank you, everybody. Bye.