Bulwark Takes - Trump and Elon Chaos Is Now Baked Into The Markets

Episode Date: February 4, 2025

Tim Miller and JVL recap on the stock markets not having the projected fall with Donald Trump's tariff plans, revealing the market stability saw through Trump's bluff. Read JVL's The Triad: Follow the Money: https://www.thebulwark.com/p/follow-the-money-trump-musk-market-reaction-tariffs-canada-mexico-nyse-dow-sp500-treasury Vox Pecunia, Vox Dei: https://www.thebulwark.com/p/vox-pecunia-vox-dei

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and take your business to the next level. Visit Upwork.com right now and post your job for free. That's Upwork.com to post your job for free and connect with top talent ready to help your business grow. That's U-P-W-O-R-K.com, Upwork.com. Hey guys, it's Tim Miller from The Bullwork. I'm here with my buddy JBL. JBL has this newsletter. He writes every day, the Triad newsletter. It's wonderful. If you're not mean, how we would translate the stock market's reaction to Trump's clown trade war. And what we saw yesterday, I think, was pretty illuminating on that front. So, JBL, I kind of wanted you to expand and extend your remarks from yesterday's newsletter on what we can learn from how the market is reacting to Trump's, whatever you want to call this, you know, kayfabe trade war. The short version is that the financial markets think everything's great.

Or at least everything's fine. They think everything's fine. It's all normal. They're not really putting in any risk. They're not really calculating any potential risk here. So this is what I wrote about. So I went and I looked at the recent history of significant stock market drops. And we've had two events since 1986, which were major sell-offs. One was surrounded the

collapse of Lehman Brothers in 2008. And the other was the pandemic in March of 2020. And using that lens, I said, okay, so this is what the markets look like when they think that things are really bad. This is the percentage drop you see. And so I said, OK, so let's see what percentage drop we get on Monday, because we have the president saying he's going to do 25 percent tariffs on Mexico and Canada, our two biggest trading partners. And also you have the entire federal government basically coming apart. You have a decapitation of the FBI and the Justice Department becoming basically a wholly

owned subsidiary of the White House. And then even more concerning, you have Elon Musk and a bunch of 20-year-olds running riot through the Treasury Department, including the federal payment system. You have Elon Musk saying that he decides which federal checks get cut coming out of Treasury. I'm sorry, we were told he only has a read-only access. Oh, is that a read-only? Okay, great. And who knows what he's doing, right?

Who knows what data was being taken out, what software he was putting onto the servers, the reports about his guy writing code. So these all, and this, by the way, this is not just like never Trump panic TDS stuff. This is stability of the banking system stuff. So, you know, when you get into this, you're talking about like the ACH, which is the automated account transfer protocols, which are like this big utility run by private consortium banks plus the Fed. You have Elon who has said that he wants to make banks no longer necessary and move all financial services inside Twitter slash X.

So seems like the type of thing that might have spooked the market. And so I said, let's watch how the markets respond. And what happened was when the markets opened in the overnight trading, they were down about 700 points in futures. The minute they opened, they dropped about 480 points. And then they started bumping back up. And then about 10 o'clock, 1030, we got news that actually the president of Mexico says they came to a great deal, a beautiful deal. One of the strongest deals you've ever seen. A lot of people are going to be very happy with that deal.

And of course the details are that Mexico just said, yeah, I guess we can keep doing what we're doing. Trump was like victory. Yeah, Maga, we won. And, and so it became clear to the markets that, oh, he's going to do that with Canada too. And so they just rebounded. So the markets finished down like a quarter of a percent. And this is the funniest part. So, so I was watching Tesla stock, because if you believe Elon Musk, then over the course of the weekend, he may have allegedly exposed himself to some criminal liability if he was

doing the things that he claims to have been doing. And so you would think that Tesla stock, if the market was evaluating this rationally, which is highly dependent upon the genius of Elon Musk, would have tanked because like, oh God, well, you know, there's the possibility that our founder could go to jail, but it didn't. It was down like 3% yesterday. And so what this tells us is that the market believes that there's absolutely no way in the world that the Department of Justice is going to do its job and prosecute anybody. So the market believes the rule of law is gone. So let's actually take the notion that the market is rational at face value.

Not sure I really believe that, given the fact that Tesla is worth more than every other car company combined. But let's just look at it from that perspective. Maybe the market is rationally pricing in some pretty dark things and also some assessments of Trump that maybe he wouldn't like, but that might be good for all of us. Like you're saying, they're pricing in the fact that the DOJ is not actually going to be investigating Elon Musk or maybe even other people besides random Twitter users that say mean things about Elon Musk.

There's not actually going to be any real disruption to the system based on this rule of law takeover. Frankly, it might actually be good for corporate kleptocrats because the DOJ is definitely not going to start doing any white collar crime investigation so it might be good for corporate bottom line right so in that sense why why worry no risk there and then you assess that trump who they were like in the opening they're like oh maybe he's for real this time you know and then it turns out that he's just doing like whatever wwe trade wars again and it's fake and it's a bluff and he's not actually going to do anything uh because he's scared uh that the markets will go down and that people won't think that he's a big genius and so the market is just pricing in trump is a wimp he's not going to do what he says and and and he and also the doJ is not going to look into us for any potential wrongdoing.

And so it's just, you know, like rocket ship to the moon. We're going to be fine. And that mindset and that view of the state of our kleptocracy, like why wouldn't it be rational for the market to go up? That's right i think or or i should say that what is more rational is for the market to go gradually down right so it's boiling frog so you you talked scotland scum yesterday and talked you know he talked about how it's bad to shake down your allies like this because if you do that over time they're gonna pull back in their trading relationships you're to wind up

with economic inefficiency, and that's going to slow growth. Just as one prime example, I had a buddy text me yesterday after listening to the Scotland Scum interview, and he said, I've got a client. They're from China. I guess I should anonymize this, but they make

a product that gets manufactured that would have manufacturing parts both in china and here right but they are looking to like build a new plant in the usa right now but they're like well maybe we should pause that for a little while to figure out like what the rules are going to be first right so like there are like some rules there ain't no rules but i mean are there going to be tariffs on us like should we move everything to the u.s does it not actually matter is it all gonna be fake we can keep doing the cheaper manufacturing in china like let's just kind of see how things shake out right so like there there's some disrupt some mild disruption there

i guess that's my point that's just one example and that'll take place at the level of the real world right right but the real world stuff takes place on such a slow time horizon, such a long time horizon. It doesn't really show up in the market as big disruptions. And so this is, I think, a danger is you could see a trickle down, an overall trickle down of the market as actual economic activity slows a little bit. But who knows? There are ways to goose that and to create artificial sugar highs in the economy. What I wanted to ask you about is what if this is just good politics? So, I mean, let's stipulate that solving actual problems

is very hard. It takes a very long time to solve a real problem. You got to bring all the stakeholders together. You got to figure out solutions. You got to compromise. You don't always get, in fact, you never get all the things you want. The solutions are imperfect. Once you've done them, people pick apart like why they didn't do X, Y, and Z, and they only did A, B, and C. But if you solve, solve, pretend problems, it's so easy. Canada's taking all the things from us. They took a lot of money from us. It's very bad deals. And we're going to put tariffs on them.

And then three days later, you're like, well, you know what? People were rooting against us. But we went in there and we got a big deal and we made America great again. Now we don't. Oh, my gosh, it's so easy. Look at that. The problem is solved. And I don't see any indication that either the markets care about this. In fact, we see the markets don't care. The markets are like, great, just keep going. I don't see any indication the voters care about it. They reelected the guy who this is his entire mode of living and i don't even see an indication that the people getting shaken down care either because the thing to realize is that mexico and canada both played along with it they could have just called his bluff they could have said yeah okay you're ridiculous you're not going to do this go pound sand but instead they had a bunch of phone calls they put out statements we had very productive conversations and uh you know they they went along rebadging again very important to say

mexico didn't give anything mexico just agreed to keep doing the things they were already doing and they went along with trump rebadging that as a tremendous victory for America first. And so if everybody likes this and is okay with it, then maybe this is what politicians should do to win votes instead of trying to solve problems. I mean, I do think it's good politics. And I, I do,

I don't, I like doing things as hard. I guess it's just a fundamental, like, and this is, I think particularly true now in our modern media age, we could do a whole nother whole separate podcast on a fundamental, like, and this is, I think, particularly true now in our modern media age. We could do a whole another whole separate podcast on this. But like, if you just don't even include the Trump era, just just look at the time horizon back to like the second Bush term.

Like, right. When really mass media and 24 hour news and all this is happening. There isn't really an example of of White house doing something and having it help them politically. Right. Like, like the social security heard him, like all the stuff, the Bush I did in the second term,

attempt to do the immigration reform hurts. Obamacare hurt Obama. Eventually it paid off at the back end, but like hurt him politically short term, all of the foreign policy stuff that I even leaving Afghanistan, like with Biden, Biden did a lot of stuff that maybe you wouldn't say hurt him but didn't really help him right as far as like the various bipartisan bills right so there's it's hard to think of something in the last even and it's true for trump in the

last 20 years that somebody is like really done like that changed things tangibly in a meaningful way that helped them because people don't want change actually like people say they want change but they don't want anything that disrupts their day-to-day life and so yeah i do think that this is a little bit of a skeleton key which is like kind of acting like you're doing a lot of big change but like not really doing anything and having it be all a show and i think this is the problem with this what we'll have a video with ann applebaum here on this channel we talk a lot about elon this is why elon's a bigger problem for him because elon is actually doing some stuff and eventually in theory that might hurt people so yeah unfortunately you don't want to have to hand it to him I do think that the uh that the fake trade war thing is like a political winner even though it's stupid and anyone with

half a brain cell would be able to tell that like this is all a clown show but you know anyone with half a brain cell only is only like 45 percent of the country. Country. That's a big problem. All right. So our big takeaway from this is not investment advice. But what we've learned from the markets so far during the Trump term is as long as Trump just keeps doing fake stuff, and as long as his billionaire buddies keep getting to get theirs and do whatever they want even if it's outside of the law then the financial markets are going to be pretty happy with that that's our that's our that's the big takeaway it's cool baby it's all cool daddy oh all right well

with that as you like to say jcl good luck america thanks jl so subscribe read his try it every day does it every fucking day you don't know how hard it is to have a good take every day very challenging um so go uh subscribe at the borg.com read the triad subscribe to our youtube feed we got a bunch of good shit coming at you later today so uh we'll be seeing y'all soon