An early taste of the Trump Temper Tantrum Tariff recession was spotted in a ZeroHedge article this morning that was otherwise devoted to giving Trump a big fat slobbering blowjob:
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Fixed Investment came at 0.08%, a big drop from the 1.31%, and perhaps the only concerning point in today's report: was there really no major data center investments in the second quarter... and if so what are the hyperscalers doing?
This is an area I've been working in lately. The reason is that if you want to start a large capex project under Trump, you had better be able to just write a check for it. Even then there are hold-ups (which is why even the Mag 7 are stuck), but there is virtually no big finance money flowing since the inauguration.
The reason is simple, easy, and obvious: these are projects that generally take 2-4 years to complete. Nobody knows what costs are going to be next week, let alone next year, because once they got their hands on the economic levers of power MAGA loves yanking them around just as much as the Democrats did under COVID. It's just as inexcusibly evil and stupid.
Trump and MAGA have created what is called "regime uncertainty." Nobody knows what a project costs, because you could have an extra 25% cost attached to a shipment that's already on a ship headed here if Trump wakes up on the wrong side of the bed. If it's a new TV or toaster you might just roll your eyes and suck it up, but if it's tens of millions of dollars of manufacturing or data center equipment that's a very different story. It's now insanely difficult to predict what the value of many of these projects will be when they're completed several years from now. Investing in them is highly speculative. Sure, companies like Apple and Google can buy new datacenters without even denting their liquid asset balances. If you're GM or Ford, somebody will lend you money. Anyone outside of the titans? “Sorry, we’re going to wait and see.”
Projects that are already underway are mostly still going due to sunk costs and continue to contribute to the economy, but the pipeline for new projects is pretty close to empty and as that starts to hit the loss of jobs in construction and providing labor to run these projects that are no longer being build is going to hurt.
Never mind the irony of the fact that the production that was supposed to move to the US because of the tariffs now can't move to the US because of the tariffs. Yes, announcements have been made, but these fall into two categories: projects that are already funded and committed and it's too late to back out on, and projects in the vauge future that will be cancelled the minute Trump is out of power.
Just today, Trump announced a 25%+ tariff on India starting on Friday. Maybe he'll do China, too. Maybe not. Nobody knows if it will hit, or miss. But as long as he keeps mashing the tariff on / off button like a toddler who's had too much sugar, the deal pipeline will continue to empty out. Even if he stops tomorrow, it will take a year or so to rebuild, then you have a resource logjam. There's no easy way out, so buckle up.
Don’t worry!
His “very smart people” are totally right about things this time when it comes to trade.
There is zero - I repeat, zero - moral difference between the people who pushed for "experimenting" with lockdowns because "we have to do something!" and the people who push for "experimenting" with trade wars because "we have to do something!"
Musk is out.
Musk put himself in a corner where he can't rip into Trump and he has to play nice probably at least through the midterms, but just look at the guy's face and watch him refuse to give a straight answer here. He put a lot on the line with endorsing Trump and starting DOGE, and Trump absolutely stabbed him in the back. Trump's supporters will blame congress, but Trump has very openly and loudly endorsed all of the DOGE-defying moves that congress has made, and has viciously attacked the one congressman (Thomas Massie) who has stood against it.
The reason is simple: Trump cares about trophies. Cutting the budget is not a trophy. DOGE trying to take a chainsaw to government was a trophy, but as soon as DOGE became more of Musk's than Trump's trophy, Trump stopped caring about it because congress offered him a Big, Beautiful Bill as a trophy instead. Just like the FBI offered the opportunity to build a Big, Beautiful new headquarters building for them (Trump loves buildings!). ...
As comedy slowly slides into unfunny wokeness hell, the last comedian standing (assuming he doesn't drop dead first, I mean just look at the guy; he's a trainwreck) will be Doug Stanhope. He closed out his recent special "The Dying of the Last Breed" with this bit on how important it is that we be able to make fun of anything. Because making fun.
Language warning, duh.
Milei continues to cut taxes, in this case import tariffs.
Why not cut them to zero? He's commited to maintaining a fiscal surplus. He's decreasing tax rates as spending is cut and the economy grows, but paying down his national debt is always the number one priority.
The horrific effects of government-forced economic change sometimes take decades to be understood.
The sugar tariffs didn't just destroy American health - they also severely harmed the economies of many Caribbean islands, to the point where even today they have not fully recovered.
