Hours before the opening bell

Writing early on Monday morning, I predict another bad day for the U.S. stock market.

By the time people read this, they will know if I am right.

CNBC

Short-term -- for the next weeks or months --  I expect valuations to drop, reflecting an economy suffering a self-inflicted wound.  Longer-term, I predict the market decline will be the cause of a course-correction by Trump, and the economy will be weakened but okay. Trump can capture, reshape, and corrupt our political system, but the American economy is an amorphous, protean organism, and it will find a way to adapt to any political system. He can't kill it.

Trump, Trumpism, MAGA -- the whole movement that Trump shapes and leads -- will not be stopped by the courts and the Congress, nor by the media, the universities, the military, the churches, the public's patriotic belief in the Constitution, nor by any other institutional safeguard. Trump is a political steamroller. The Trump movement will end when it becomes unpopular enough and stops itself.

A salesman wants to sell a popular product. Trump's sloppy tariff plan is upsetting long-established trade relationships. Markets did not begin to fall when Trump was elected. Voters thought he might change some things they didn't like -- uncontrolled immigration and woke moral scolds -- but they didn't think he was serious about taking a chainsaw to government, nor did they think he would implement massive tariffs. They thought he was bluffing. In February it became evident that Trump wasn't bluffing. Markets began falling. Now, after "Liberation Day," they are crashing.

Trump talked himself into believing his own schtick, so it will take him some time to realize he is selling a policy product people don't want. He won't admit he was wrong. He will reverse course by declaring victory, telling us it worked perfectly, that the world bowed to his masterful negotiation skills.

If he does this relatively soon -- in weeks, not months -- then I expect a buying opportunity for investors sometime soon. Not yet, I predict. Prices have further to fall. But soon. But if Trump digs in and defends his position beyond a few weeks, he will badly damage the economy. We will have a recession and markets will have much further to fall. 

I expect Trump to change course and declare victory soon. Trump wants to stay popular. Trump is a sociopathic, narcissistic con man, the worst caricature of a salesman. Salesmen know what salesmen know: The customer is fickle but must be served. Arthur Miller's Death of a Salesman describes Trump's vulnerability:

Willy was a salesman. And for a salesman, there is no rock bottom to the life. He don’t put a bolt to a nut, he don’t tell you the law or give you medicine. He’s a man way out there in the blue, riding on a smile and a shoeshine. And when they start not smiling back—that’s an earthquake. And then you get spots on your hat, and you’re finished. Nobody dast blame this man. A salesman is got to dream, boy. It comes with the territory.

His MAGA base will stop smiling back if the economy crashes.

[Note: I retired from giving financial advice professionally ten years ago. Consult your own advisor if you want actionable financial advice. Now I mostly look at political markets, not financial ones, but sometimes they are nearly the same thing.]

[Note: To get daily delivery of this blog to your email go to: https://petersage.substack.com Subscribe. Don't pay. The blog is free and always will be.]