The Stable Genius Report

• The President is allowed to stop all trade with and license foreign countries, an action more onerous than a tariff, with full Congressional approval.
• The President is not allowed to impose a simple tariff on a foreign country, even for national security purposes.
• This situation deviates from the intentions of the Founders.
• It is 'ridiculous' that other countries can tariff the U.S. but the U.S. cannot tariff them, which is seen as a 'dream' for other countries.
• Businesses are investing in the USA specifically because of tariffs.
• The United States Supreme Court appears to be unaware of these economic realities.

The post advocates for tariffs as a beneficial policy tool, claiming they drive businesses into the USA. This signals a strong preference for trade protectionism, a policy stance that has historically led to significant volatility and re-evaluation of corporate earnings for S&P 500 companies, especially those with extensive global supply chains or export markets. The re-introduction or threat of widespread tariffs could impact various sectors, including manufacturing, retail, and technology.

The post discusses trade powers and national security in a critical tone regarding current policy. While it does not contain direct threats of military action or ultimatums, aggressive trade rhetoric and advocacy for tariffs can increase economic friction and diplomatic tensions with other nations, which could be precursors to broader geopolitical issues, albeit not directly escalating to international conflict in this instance.

• Commodities: Should tariffs become a more prominent policy, increased trade tensions could drive demand for safe-haven assets like Gold (XAU) to rise, while industrial commodities such as Copper could see demand soften due to global growth concerns. Oil (WTI) might be volatile on global trade outlook. Short-Term Watchlist: XAU/USD price action, headlines related to trade disputes. Medium-Term Focus: Inflation trends, global demand forecasts.
• Currencies (Forex): A push for tariffs could lead to heightened trade disputes, potentially impacting the US Dollar Index (DXY). While tariffs could strengthen the USD in the short term due to repatriation or perceived economic nationalism, prolonged trade wars could weaken it against major trading partners' currencies. Short-Term Watchlist: DXY movements, reactions in USDJPY and EURUSD. Medium-Term Focus: Central bank responses to trade-induced economic shifts, global capital flows.
• Global Equities: Advocacy for tariffs suggests potential future policy that has historically caused uncertainty and negatively impacted multinational corporations. This could lead to sell-offs in major indices like S&P 500, Nasdaq, STOXX 600, Nikkei 225, and Hang Seng. Sectors with deep international ties, such as technology, automotive, and retail, would be particularly vulnerable. Short-Term Watchlist: Futures open, VIX spikes, sector-specific performance. Medium-Term Focus: Corporate earnings revisions, global economic growth forecasts.
• Fixed Income (Bonds): Renewed emphasis on tariffs and potential trade wars could trigger a flight to safety, leading to lower US 10Y and 2Y Treasury yields. However, if tariffs are perceived as inflationary over the medium term due to increased import costs, yields could eventually rise. Credit spreads may widen as corporate profitability faces pressure. Short-Term Watchlist: UST 10Y yield levels, flight to safety indicators. Medium-Term Focus: Inflation expectations, Federal Reserve policy reactions.
• Volatility / Derivatives: Trade policy uncertainty is a significant catalyst for market volatility. The VIX would likely experience upward pressure in anticipation of or response to tariff announcements, reflecting increased investor fear and hedging demand. Options positioning could shift, amplifying moves. Short-Term Watchlist: VIX levels vs VIX futures term structure. Medium-Term Focus: Volatility regime shifts, systemic risk from prolonged trade disputes.
• Crypto / Digital Assets: Bitcoin (BTC) could exhibit mixed behavior, potentially acting as a risk-off asset if traditional markets decline due to trade fears, or following tech stocks as a risk-on asset. Heightened economic uncertainty could drive some investors towards perceived decentralized assets as an alternative store of value. Short-Term Watchlist: BTC/USD price action, correlation with tech indices. Medium-Term Focus: Macro liquidity conditions, regulatory developments in a protectionist environment.
• Cross-Asset Correlations and Systemic Risk: Increased trade tensions have the potential to disrupt normal cross-asset correlations, for example, causing both equities and bonds to sell off simultaneously if inflation and growth concerns converge. Supply chain vulnerabilities and increased protectionism could stress global financial systems. Short-Term Watchlist: MOVE index, credit default swap spreads. Medium-Term Focus: Shadow banking risks, central bank intervention capacity, global market fragmentation.
• Retail Sentiment / Market Psychology: Strong rhetoric advocating for tariffs can influence retail investor sentiment, potentially sparking speculative interest in domestic industries perceived to benefit, or 'meme stock' activity related to companies impacted by trade policy. Social media discussions around economic nationalism and trade could intensify. Short-Term Watchlist: Social media trends, retail trading volume in affected sectors. Medium-Term Focus: Social media influence on market structure, potential for coordinated retail pushes.