Blink of an Eye

The damage may have already been done, and a recession may be brewing anyway

Summary: Trump put a 90-day pause on most of his tariffs last week and markets breathed a sigh of relief, but the damage may have already been done, and a recession may be brewing anyways. Confidence has deteriorated and the threat of tariffs continues to hang over the economy. Meanwhile, 145% tariffs on China mean that the US is effectively abruptly shutting off trade with its largest trading partner. At the same time, the Fed continues to signal that the tariffs will make them less likely to change interest rates, not more likely.

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Macro

Trump paused his tariffs
"Based on the fact that more than 75 Countries have called Representatives of the United States, including the Departments of Commerce, Treasury, and the USTR, to negotiate a solution to the subjects being discussed relative to Trade… I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately." – U.S. President Donald Trump

But not on China
"Based on the lack of respect that China has shown to the World’s Markets, I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately." – U.S. President Donald Trump

Markets gave a sigh of relief
"If you want to calm down the markets, show progress... let them settle down, take a deep breath, negotiate some trade deals. That's the best thing they can do." – JPMorgan Chase (JPM 0.00%↑) CEO Jamie Dimon

But a recession may be brewing anyways
"Most CEOs I talk to say we are probably in a recession right now. A couple of airline CEOs told me, and one CEO specifically said, 'The airline industry is like a proverbial burden, a canary in a coal mine.' I was told that the canary is sick already... I do believe we’re probably starting, if not already in, a recession." – BlackRock (BLK 0.00%↑) CEO Larry Fink

Economists say recession is a coin flip
"What I would say is our excellent economist, Michael Feroli, I called him this morning, specifically to ask him with -- how they're looking at their forecast today. They think it's about 50-50 for recession, so I'll just refer to that." – JPMorgan Chase (JPM 0.00%↑) CEO Jamie Dimon

Confidence has deteriorated
"We saw it again today with the confidence taking a little bit of another beating in the survey data that was released this morning... And if you're a consumer the fear of our price is going to go up, what's it going to mean?... could the economy tip into recession." – Bank of New York Mellon (BK 0.00%↑) Vice Chair Robin Vince
"In the last six weeks, we’ve seen a corresponding reduction in broad consumer confidence and corporate confidence." – Delta Air Lines (DAL 0.00%↑) CEO Ed Bastian

Trade negotiations will be prolonged
"While last week's announcements provided an initial baseline, we should expect that negotiations will take time and it is likely that a clear final picture won't be reached for a while... The readthrough of this uncertainty into both capital markets and the real economy creates elevated risks in the near and medium term." – Bank of New York Mellon (BK 0.00%↑) Vice Chair Robin Vince

A 90-day pause prolongs uncertainty
"I think with a 90-day pause on tariffs and then probably a fairly long tail on full emergence of a clear picture... I think as every day goes by, let's call it, this trade has negative carry to be able to hold." – Bank of New York Mellon (BK 0.00%↑) Vice Chair Robin Vince

Tariff policy brings layers of uncertainty
"There are many uncertainties surrounding the new tariff policy... The quicker this issue is resolved, the better because some of the negative effects increase cumulatively over time and would be hard to reverse. In the short run, I see this as one large additional straw on the camel’s back." – JPMorgan (JPM 0.00%↑) CEO Jamie Dimon

"You know, we now have a 90-day pause on the reciprocal tariff, which means longer, more elevated uncertainty." – BlackRock (BLK 0.00%↑) CEO Larry Fink

People are stuck in a wait-and-see mode
"And anecdotally, a lot of people are not doing things because of this. They're going to wait and see... So, people have to adjust this new environment." – JPMorgan Chase (JPM 0.00%↑) CEO Jamie Dimon

"People are cautious. So I just kind of put it in the wait-and-see category. Cautious in the shorter term, but probably still bullish for the longer term." – Wells Fargo (WFC 0.00%↑) Director Charles Scharf

"A couple of importers just yesterday, and they've chosen to suspend imports for a while... I know this won't work for everyone, but it might be good just to hit the pause button if you can do it." – Expeditors International of Washington (EXPD 0.00%↑) Senior Advisor Customs Ted Henderson

"If that prober landed in the port tomorrow, it's going to get hit by a tariff... So I think people are like, well, let's wait and see what happens." – Aehr Test Systems (AEHR 0.00%↑) CEO Gayn Erickson

"There's a couple of large POs we'd like to place because of lead times, but we're just kind of maybe holding off... So, I think a lot of people are just kind of a wait and see for a while in terms of placing any large orders." – Richardson Electronics (RELL 0.00%↑) General Manager Greg Peloquin

Market prices still remain high
"Even with the recent decline in market values, prices remain relatively high... Markets still seem to be pricing assets with the assumption that we will continue to have a fairly soft landing. I am not so sure." – JPMorgan (JPM 0.00%↑) CEO Jamie Dimon

The Fed is digging in even more
"In my view, the hurdle to change the federal funds rate one way or the other has increased due to the tariffs... the risk of unanchoring inflation expectations seems to have increased notably." – Minneapolis Fed President Neel Kashkari

Stay tuned for earnings season
"And then, you're going to hear a thousand companies report and they're going to tell you what their guidance is... I assume you see that." – JPMorgan Chase (JPM 0.00%↑) CEO Jamie Dimon

International