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Culture War Roundup for the week of April 7, 2025

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Quality over quantity.

I held off on making a post because I assumed it would get buried under a flurry of tariff discussion. Although it looks like that hasn’t materialized yet.

On the tariff front, I'm still waiting to see if the market fall off is a tantrum or a real turn.

similar to Covid, the market is pricing in the non-zero possibility of something really bad happening. like a bad recession or hyperinflation. Like Covid, history has generally shown such moves to be an overreaction.

The S&P 500 is now up on the day.

I wonder if the drop was retail traders scared by the news into a sell off and the recovery institutions eating their lunch.

AFAICT there have been no noises made that the tariffs won’t actually be put into effect. Just lots of concessions being offered by other countries.

The opposite, it was institutional investors selling and retail investors trying to "buy the dip". To a record degree during the first big selloff on Thursday.

Individual investors made a record $4.7 billion in stock purchases Thursday as new tariffs pummeled markets

Individuals made $4.7 billion worth of net equity purchases on April 3, meaning value of shares they bought outpaced the amount they sold by $4.7 billion. This is the highest daily inflow over the past decade, according to data from J.P. Morgan.

Which makes sense. For one because retail investors have more of a gambling mentality where they aren't obligated to avoid risk and can bet that Trump will back down or get overridden by Congress. For another they aren't necessarily knowledgeable about markets or economics, when 50% of the population voted for Trump I'm sure there's plenty of people who default to partisanship and assume he knows what he's doing. And even in left-wing communities a surprisingly common line I saw was that "Trump is deliberately crashing the market so that billionaires can buy it up cheap", people tend to assume that it must be to someone's benefit.

Stocks have exhibited a long-term tendency to rise, so buying dips has generally been shown to be prudent. Institutions have to meet other criteria, like defined risk tolerance. You don't have to be that knowledgeable to observe this trend, and even the experts who are assumed to be knowledgeable have been shown to be no better than a coin toss e. g. "J. P. Morgan sees 40-60% chance of recession in 2 years" This is what passes for 'expert analysis'.

The record for stocks outside of US is less promising, it took Japan almost 30 years to reach the stock market level seen in late 80s.

The US stock market has not just boomed because US is somehow an exceptional economy, it has also boomed because of its role in the global economic order as the global financial hub. This is precisely what Trump is attempting to dismantle.

it's see-sawing. I added to the dip. I think it's an overreaction. It's one of those things where it's not suddenly going to get better as both sides have massive egos invested, but IMHO it's not as bad as the headlines and market reaction would imply.

As of right now (2025-04-07T18:15:00Z), we're up 0.2% for the day, down 8% for the week, and also down about 8% since Trump took office.

I don't think a <1% recovery is the recovery institutions "eating the lunch" of retail traders.

I think that tariffs on China are enough to cause a real turn. Add everything else to mix...