[kortilla]

>This isn’t a normal drawdown. This is a crisis with the leadership of the United States.

The same thing happened just 4 short years ago when covid hit. Mass panic and then intervention kicked in. The intervention could have been taken away at any time but the market went extremely risk-on anyway and you would have gotten left behind if you sold out.

>but even then the markets will be cautious for the next 4 years at minimum.

You are overestimating the cautiousness of the market. Unless there are better returns offered in some other investment, the capital is going to pile back in if something like tariff deals start getting announced.

[danmaz74]

>>This isn’t a normal drawdown. This is a crisis with the leadership of the United States.

>The same thing happened just 4 short years ago when covid hit.

If by "same thing" you mean the market crashing, then yes, it's similar. But the cause of this isn't the "same thing" at all. For the next 4 years, the USA will have a president who wants to annex Greenland and Canada, who hates most (all?) US traditional allies and trading partners, who doesn't believe in free trade. The effects on the world economy are going to be slower to take effect compared to COVID, but they're going to be much deeper and long lasting.

[kortilla]

The effects of covid were literally being talked about as the entire world economy grinding to a halt overnight. It was mass panic beyond high tariffs for a foreseeable future.

The market was in straight free-fall until all of the major govts stepped in to print trillions. It was like a light switch made the “end of capitalism” disappear in a day.

[kortilla]

The rally back today on just a pause illustrates my point. No permanent fixes at all, just a pause and the market went up 10% in a day.

[j4coh]

Who intervenes if it’s the leadership manufacturing the crisis?

[JohnnyMarcone]

Pressure from the electorate, business leaders and foreign governments could spur Congress to act.

[Aurornis]

> The same thing happened just 4 short years ago when covid hit.

COVID was a natural disaster. Leadership responded to it.

This is the opposite. Markets were going well. Leadership intervened to crash them.

Do you see the difference? It’s not the same.

> You are overestimating the cautiousness of the market.

You are underestimating the impacts of risk premia.

This administration just showed that they don’t know what they’re doing, but they’re willing to go all-in on disastrous economic policy. They’ve already waffled on previous policy and then came back and doubled down. They’re still talking about more tariffs.

This isn’t a little “oopsie” any more. It’s a pattern. It’s going to be a long 4 years until we can get back to stability.

> Unless there are better returns offered in some other investment

You are so close. It’s not just returns, it’s risk. Trump just made the market hyper risky.

[redserk]

Yeah, I think it’s worth emphasizing: we are in Month 4 and there’s already been an enormous amount of chaos.

We haven’t even seen the effects of the agencies getting cut. Sure they’re running for now, but burnout can set in quick for the remaining employees and some YC investor-clown’s delusional dream of an “AI” workforce isn’t going to save us.

I’m just one fish in the sea of retail investors but I won’t be in any rush to convert cash savings into investments with this current trajectory.

Besides, cash is infinitely more useful for my mortgage payments — especially if layoffs in the private sector start.

[ModernMech]

> we are in Month 4

I know this is shocking, but it hasn't even been 3 months yet. 2 months and 18 days.

[kortilla]

The market returns today should make you re-evaluate your position on this. Anyone following your thesis would have sold out at the bottom.

[kortilla]

>but they’re willing to go all-in on disastrous economic policy.

They did it to stem the covid bleeding too.

>It’s not just returns, it’s risk. Trump just made the market hyper risky.

What market do you think Trump didn’t make risky that this capital will flight to? All kinds of bond default risk shot up across the board as well.

[graeme]

The covid crisis was an actual event in physical reality not caused by admin policies.

This crisis is the admin taking a sledgehammer to international capitalism. No obvious intervention other than "stop doing that".

I'm sure at some point the fed would have some kind of response but inflation of tariffs is a huge risk and that limits what the fed can do unless they have co-ordination with the admin.

[disgruntledphd2]

> The covid crisis was an actual event in physical reality not caused by admin policies.

Sortof yeah, but also sortof not. Basically any non-Trump president would have been briefed about Covid in January 2020, and most of the previous ones invested a bunch of resources into making sure that the disease was contained far away from US shores.

Even Bush II would have done that (and did, I believe for SARS).

[graeme]

It's a possibility. SARS II was much harder to contain though. The first SARS actually made it to North American hospitals, but was contained. It didn't spread in the populace.

Once SARS II made it out of China, only globally coordinated net 0 case policies could have stopped it. I think it would have been worth trying for but there was no appetite for it.

[disgruntledphd2]

> It's a possibility. SARS II was much harder to contain though. The first SARS actually made it to North American hospitals, but was contained. It didn't spread in the populace.

Totally fair, but as I recall he didn't even try to keep it away from US soil (which had always been the CDC approach).

[ZeroGravitas]

COVID keeps getting brought up.

Let's remember that it was much worse than it had to be, because the same President actively causing this current catastrophe thought he could just ignore the problem and it would go away.

[motorest]

> (...) the capital is going to pile back in if something like tariff deals start getting announced.

What leads you to believe that scenario is realistic?

I mean, the list of US trading partners is dominated by less than a dozen trading blocks: EU, Mexico, Canada, ASEAN, China. That's it. Trade with India is as significant as trade with Italy alone, and a massive deal with them would barely move the needle in this trade war.

Unless the US somehow makes it's own trade war go away with the likes of Canada and the EU, there is no bright outlook for the market and economy. Trump's administration is repeatedly threatening both with annexation.

To make matters worse, do you really believe any trading block will move back to preserve economic ties with the US after this mess? Not a chance in hell.

The EU, which thanks to the Trump administration is already scrambling to prepare for a war with Russia, is excluding the US from supplying them arms. This is the extent to which these trading blocks are going to shed ties with the US.

Do you think things will just go back to how things were 6 months ago? The Trump administration ensured this is impossible.

[kortilla]

> What leads you to believe that scenario is realistic

It literally just happened today.

[thebigjewbowski]

> the list of US trading partners is dominated by less than a dozen trading blocks: EU, Mexico, Canada, ASEAN, China. That's it.

ASEAN countries are eager to make a deal. The USMCA deal is still in tact with Mexico and Canada.

> The EU, which thanks to the Trump administration is already scrambling to prepare for a war with Russia, is excluding the US from supplying them arms. This is the extent to which these trading blocks are going to shed ties with the US.

Germany is in an energy crisis and a few other members are close to a sovereign debt crisis. Domestic production of weapons will be tough and expensive. The EU’s plan to sell bonds to pursue war with Russia looks horrid. They’re in no position to be in a trade war. In a few months time when this reality sinks in, they will have to make a trade deal and remove US tariffs.

[disgruntledphd2]

> Germany is in an energy crisis and a few other members are close to a sovereign debt crisis. Domestic production of weapons will be tough and expensive. The EU’s plan to sell bonds to pursue war with Russia looks horrid. They’re in no position to be in a trade war. In a few months time when this reality sinks in, they will have to make a trade deal and remove US tariffs.

This really, really depends on how things evolve this week. Like, the EU will 100% tarriff the US (and probably China to prevent dumping) this week.

The big question is whether or not they use the Anti-Coercion Instrument, and hit US tech and financial services. Selfishly, I hope they don't (as I work for a US fintech while I am based in the EU), but this will probably happen if Trump retaliates to this week's sanctions (which he probably will).

This is gonna get a lot worse before it gets better, unless there's a unilateral pullback on the part of the US (which seems very unlikely).

[thebigjewbowski]

> (and probably China to prevent dumping)

But why does the EU even want a manufacturing sector, don’t you all realize that no sane person wants those jobs? I kid, of course.

It’s truly a sad state of affairs and I hope that we all come to an understanding this week.

[motorest]

> But why does the EU even want a manufacturing sector, don’t you all realize that no sane person wants those jobs?

Why do you equate responding to Trump's tariffs with "want a manufacturing sector"? Trump is pushing the US to isolate itself from the world, not the EU. A few years ago the likes of Volkswagen were investing in auto factories in Morocco.