By Peter Tchir of Academy Securities

I think this is the second time I’ve used a Cher song in the T-report (must be a guilty pleasure of mine). I also think that some of my colleagues at Academy have some firsthand knowledge of the filming of the video. In any case, as headline after headline hit last night, this is the song that kept popping into my head.

If we could turn back time?

If we went back a few weeks ago and had announced:

• 10% tariffs on every nation (as “reciprocal”) with 90 days to negotiate deals.
• All USMCA compliant goods exempted.
• A variety of important tech exempted.
• Something harsh, but manageable in the interim, with China.
• Complete faith in the independence of the Fed.

How bearish would I have been?

Would recession still be on the table? Possibly, but the “capital R” recession would have seemed unlikely and Depression would not have been something I would have contemplated putting in writing.

Would 20% to 30% down on stocks been my call? Definitely not.

But we didn’t!

Do These Pants Make Me Look Bad?

I think in all human history, the only “correct” answer to this question is NO! The real answer might be yes, but that has rarely helped any relationship. Even, avoiding the question by saying that the pants bring out the color of your eyes, tends to be taken for a no.

This administration has spent the better part of the past month telling every country that they look awful in their outfits! That whatever they had on, was just hideous.

Now, in the car ride to the event, we’ve decided that maybe the outfit wasn’t that bad?

Bessent speaks at 10:00 am today. It seems likely that he might bring up some things the Treasury can do to help the bond market (there is chatter about announcing an operation twist to help support the long end of the yield curve).

We can continue to rally on the back of this new “softer” approach from the administration. Some of the people in the admin seemed to have disappeared from the talk show circuit. There is clearly some “repositioning” of policy.

Maybe as we wrote about this weekend, in Dealpalooza, the admin will back off and make some deals (even if they aren’t particularly effective). More importantly, maybe the admin will pivot to Domestic Production for National Security.

That pivot would be welcome and maybe the self-imposed de-escalation in tariffs is a step in that direction?

I find it difficult to see how this backtracking will help “win” big concessions in trade deals. To me, it confirms, that we over-reached, over-estimated our relative strength and have had to backtrack. That isn’t great for the U.S. negotiating position, at least not for those countries who already felt that the U.S. had miscalculated. Recent actions will only confirm that opinion for those countries.

But maybe it let’s us pivot to something more domestic in nature. Something that isn’t a zero-sum game.

That would be positive and I could embrace this rally further.

It seems plausible to expect more positive headlines today, especially from Bessent.

But, the reality is, I think the U.S. is in a far weaker position globally today, than it was a month or two ago. We, unfortunately, cannot go back in time, and the things that have been said or done, cannot be unsaid (they can be undone, but that isn’t the same).

Had we just started here a month or so ago, markets would be in better shape, and many friendships wouldn’t have been tested the way they were. But we aren’t.

So, I’ll move to cautiously optimistic that the worst is behind us on the policy front.

I’m not sure the damage of what has been done and what is still on the table (I think there are still tariffs in place), has been priced into equities after these recent bounces. The bond market may also have to shift to thinking about deficits again, as those concerns may reach “headline” status again, if everything else calms down.

I do feel bad that I no longer can claim to have any idea of what tariffs are in place, on what, with who, but I suspect some of those in charge of enforcing the policy no longer do either, as it has been “evolving” so rapidly.

Good luck, enjoy the respite, it is okay to be optimistic, but there is some risk that after the shorts are squeezed and reality sinks in, markets turn lower again.