'WORST APRIL SINCE GREAT DEPRESSION' With Tariff Chaos

0:03 Good morning everybody. Happy Tuesday. We have an amazing show for everybody today. Do we uh do we live for the pound or no? All right. Oh, we live. People live for the pound. There we go. I still get to say it. We're fermenting a coup today. Yeah, we're fermenting a coup here over at Breaking Points. Emily is in for Crystal, who will be back tomorrow and on Thursday. So, don't worry about that. But, uh Emily, the people have cried out for an Emily and Saga show for a while. Uh according to our records, it has been two years since the last Emily and Saga show. What a gift to everyone in the audience. Yeah. So the it is it is a great gift uh that we do. So people people can't accuse us here of not um of not giving in to our audience demands, right? So the people demanded it and the people are getting it by plebite. So there you go. Uh I

0:48 think the last time we did, by the way, there was a brick wall behind us. Yes, there was. Yeah, that's right. That was before the the new set and everything. So yeah, look, you can see how far we've come. That's right. All right, what the hell are we covering today? This is the toughest part of the job setting all this up. Tariffs. All right, tariffs. We're going to talk about tariffs. The a worst April for the Dow Jones since the Great Depression. Uh not exactly a great headline there for the administration. We're going to talk about some of the movements in the stock market. Big uh dump yesterday of major stock indices as well as some major movements by China warning other countries not to team up with the United States. We're going to continue the uh coverage of the Pete Hegathth saga. There is just insanity going on. Pete Hgsathth knifing his own staff in the back who recently were fired from the Pentagon. We also have

1:34 one of those former staffers, Dan Caldwell, speaking out on the Tucker Carlson show, really giving us some insight into the knife fights that are happening in the administration over war with Iran. We're going to talk about Kirsty Gnome. Uh she apparently got her purse stolen despite having been surrounded by Secret Service agents. She had $3,000 in cash on her. Just some very weird stuff that's going on and obviously also an insight into one of the top law enforcement officers in the United States. Uh this is a topic I selected specifically uh because Emily is here with me. We're going to talk about the Trump administration's uh efforts to boost birth rates here in the United States, focused uh specifically on motherhood, tax breaks for new moms, uh medals for mothers that have more than several children. So, we're going to break some of that down. We're going

2:20 to talk about that fight with Harvard, between the Trump administration and Harvard, a major escalating legal battle between the two. It stems from that quote anti-semitism fight, but it's actually become much bigger than that. And then we're very excited to be joined by Fire, uh the president of FIRE, who is going to break down some of the free speech uh attacks by the Trump administration. Fire, Emily, probably the single best organization that's been consistent and principled on these matters over the years. uh really we always look to them for guidance. They've spoken up on very unpopular issues, popular issues. They don't care uh literally at all. So, we're excited to speak with them. And then also, I guess people are also getting their wish here in AMA uh with Emily and I for our premium subscribers. So, don't forget you can support us at

3:05 breakingpoints.com. You can participate in these live AMAs and more. And also see Emily every Friday on the Emily Show or or on the Friday show. Sorry, I guess we call it We could call it We should call it. Should we call it the Emily Show? Yeah. I like it. I like it. All right. Don't forget, if you can't uh support us right now and all of the new expansions that we're doing here, it's totally fine. Just make sure that you like and subscribe to this video. And if you're listening to us on a podcast, just go ahead, give us a fivestar review and send the episode to a friend. That is the single best thing that you can do for us. You can even pick your favorite episode. Uh Emily, you know what's fascinating in our podcast downloads is that there are hundreds of thousands of people who listen to these like at the end of the week. like like they don't listen to them daily. We have a huge spike in Fridays and Saturdays. I don't

3:52 get I'll be honest. I don't get it. But I guess it kind of makes sense like catching up on the news in any particular episode. Like is it a Monday? Yeah. Like a Monday episode will boom on like a Friday. I'm like I just I don't get it. But YouTube is much more like regular, you know, like after 48 hours or so like most of the people would watch something are going to watch it. There are a few evergreen topics. But yeah, these podcast listeners, man, I I I've been trying to understand these people for four years. I I'll I'll never get it, but it's okay. Yeah, we love you. Yeah, we love you anyway. So, if you're listening to this on Friday, four days from now, uh if you're listening to this four or five days from now, go ahead and follow your instructions. Okay. All right. Let's get to the tariffs. So, massive selloff in the stock market yesterday. Uh not one particular thing that seems to have set things off, but uh just still real signs of danger. Here's CNBC uh right around

4:39 the close. Let's take a listen. Look at the markets, which are very unwelcome on this Monday afternoon. The Dow is down, 1270 points right now. So, we're at session lows. And if we close here, it will be the 11th,000 point drop in the Dow's history, and it's the fourth this month. Now, the S&P broad market. Here's what you need to know. Down 3% and down 16% from the 52- week high. We're about 200 points above the intraday low of 4910 on April 8th. Keep these in mind as people look for a retest. And is that an entry point? The NASDAQ is the worst of the major averages led lower by Nvidia and Tesla. Tesla down 7% ahead of its earnings tomorrow. And of course, check the yield on the 10-year because unlike many most previous stock selloffs where you at least get some cushion here. Nope, not getting it today. 440. This

5:25 time, treasuries are being sold as investors sell stocks as well. Dollars down, yields are higher. Yeah, and actually the yield has spiked even more since then. We're going to get to that in a little bit, but let's go ahead and put this up there on the screen. The Dow is currently headed for the worst April since 1932 as investors are sending no confidence s signals. Quote, few think the administration's negotiation with trade partners will yield results soon enough to ease the strain. And Emily, that really seems to be a big thing that uh was dawned on the market yesterday and a lot of these investors is the fact that the Japanese talks went so badly and that the Japanese prime minister and their team left Washington with no deal. And then honestly the worst signal was not just them leaving. It was the Japanese prime minister going to

6:11 parliament and declaring we will not concede to all of the demands of the United States. They are actively counter signaling the Trump administration at home. And by the way to great popularity actually the Japanese people not very happy about the way that they have been treated throughout this process. There's been ongoing talks there with China and with South Korea. something, you know, Trump historically has uh made three countries which absolutely hate each other's guts to at least move in some solid direction as a result of the tariffs. And so I think as this begins to dawn on the investors and on the market, they're seeing that Japan, which was supposed to be the check mark, like that was supposed to be the easiest one to be done. And they're like, "Holy cra, we have 70 more of these trade deals that are supposed to happen in 90 days."

6:58 They're like, "This is just not going to happen." Like this is not reality. and then no signal yet from the Trump administration around any sort of cave. The more that starts to set in, I mean, you know, everybody celebrated that stock market bump after the 90-day pause. We are just a few maybe two 3% or something like that away from being right back to where we started, even before the 90-day pause where they initially wanted the bonds. Obviously, we'll get to in a little bit, but this is this is not a good sign. Yeah. I mean, this is maybe the worst sign because I would say it's the worst. There's a there's a counterfactual here where Trump actually is signing and inking all of these like really good deals. And that sounds a little bit ridiculous, but it's possible, right? That he could be coming away from this with actually some significant progress in these negotiations with Japan, with

7:44 places like Vietnam. It's entirely like within the realm of possibility, but it's also the predicate for his entire strategy. Yes, his strategy hinges on being able to seal these deals to seal them quickly and to get good ones. Uh, and again, I think it's, you know, more likely than not, he it's always been more likely than not that wouldn't happen. But it was always a possibility. Always a possibility. And what's interesting too is Charles Gasparino over at Fox Business just said today, quote, "About 10 days ago, Scott Besson was telling Wall Street executives that he was making progress cutting trade deals with India, Japan, South Korea, and Australia, some of the largest trading partners." Quote, "Then nothing happened and the markets tanked." So, there's been a combination of a couple of factors. It's not only the lack of

8:32 trade deals. There's also been Trump's escalating attacks on the Federal Reserve chairman, Jerome Powell. And look, I mean, I don't think Trump is empirically incorrect that we do need a rate cut, but it's really more about the signal that he himself would take like sort of un unitary executive power over the central bank, which would mean that there would be an escalating fight and most importantly uncertainty. So, it's not the fact that investors don't want a rate cut. They would be absolutely happy to do so. Uh, as we've already seen, the European Central Bank has cut rates. There's been numerous other countries that have done so as well. The dollar right now, by the way, is a disaster. Uh the dollar is down to I believe almost every currency except for the Turkish lera all-time highs or not all-time highs but near all-time highs with the Europe with the uh euro uh the Japanese yen and a few other currencies which

9:18 traditionally actually were quite down. This is very difficult because even without tariffs that means that these foreign goods are going to be more expensive for United States investors and importers that are able to afford this. Uh that is not to even mention you know the other stuff that's happening right now in the markets. Let's put A2 please up on the screen because this really actually underscores a lot of what I'm talking about here about the dollar weakness. Quote, "Trump trade offensive threatens America's financial primacy and the rising volatility and the dollar weakness is raising fears for a financial realignment away from US shores." And so this is the big fear right now, but the move away from the United States dollar as a reserve currency. traditionally as they were talking about on CNBC, you see bond yields start to go down, which obviously

10:05 has major pressure uh in terms of interest rates, the Federal Reserve, but we don't see that. And so really what we're seeing is both a fleeing from US markets and from the US dollar. And so when you have massive uncertainty on those t two things as well as this massive pressure in the bond markets you basically have financial uncertainty and pressure at all levels at the consumer level at the equities level at the bond level and now at a currency level. In fact I was just reading today that one of the largest uh foreign exchange of traders like of currencies has been margin called and has to basically halt like all trading. And so there's, you know, I mean, look, I'm not shedding tears here for forex traders who like, oh, boohoo. But it's a signal uh

10:50 obviously that the uncertainty and the uh the like basically shock to the overall dollar is causing fundamental questions to be asked across the world. And I I think it always just returns to why. It's like if that's a result of a war, if it's that's a result of, you know, outside pressure, if that's a result of a hyperintentional policy for ddollarization across the world to make US goods more competitive to for genuinely good trade deals, a lot of people will be fine with that, you know, right? But the the point is that with within this vacuum of chaos where there seems to be no policy agenda, everything is basically at the whims of whether Peter Navaro is in the right building in the White House complex or not. That's when everybody is just like, "Yeah, I'm done." You know, I'm I'm hoarding cash

11:36 if you're lucky enough to have some taking out debt. Or if you're a company, I'm buying nothing for the next 90 days. And you know, the freight drop that's coming from China, it just still has not set in for people because you're not ready for like the price increase at Costco. You're not ready to go there and to see stuff that you normally would that's just not on the shelf. It takes a couple of months to see that happen. I mean, don't forget the peak of inflation in the COVID era was 2022. Even though 2021 was marked by all of those increases, it was really after the invasion of Russia where we saw massive shock to the financial system, massive shock to the energy market and basically a year of unchecked inflation that the government allowed to basically just happen where all of those things

12:22 culminated where people were like, I am done with Joe Biden and uh you know, I'm really done with the overall US economy. And they really never forgave him for that. And I I think that they're really on track. You know, you know this as well as I do, but a lot of people in the White House right now specifically are looking back to 1981, and they say Ronald Reagan weathered a temporary recession. The short-term pain paid off for him. Yeah. He was able to, you know, muster the uh he he was able to mobilize voters and have a very successful return to the presidency. This is very different from that in a couple of different ways, but just one important way that you alluded to, it's not about price. It's this is not just about price increases. This is about the availability of goods. This is about scarcity. This is about uh things changing. This is about the shelves

13:09 changing, not just the prices going up. And I think to your point, not only has that not sunk in for consumers, I don't think that that has sunk in for the administration. And the uncertainty as leverage was always, again, if this deal were to if this entire strategy were to play out successfully, that had to be very temporary because it was good leverage. Yeah. But let's talk about the 1981 recession because that's a very important point. But uh why did Reagan get forgiven for the 1981 recession? Because it was a hangover, a vulkar monetary policy and thus people forgave Reagan because they didn't think it was his fault. And also Reagan was a really good politician at the height of his literally probably at the height of his like rhetorical powers in 1981 where he's like oh you know the happy optimism

13:54 the jelly beans uh and all that and he's like look you know like we're going to get through this together. Uh he was an excellent communicator and he was actually able to use that recession to eventually push a lot of major legislation. Now, we can debate the effects in all of that, but that was a hyper competent, in my opinion, team. Regardless of whether you think that what they did was good or not, but most importantly, they were able to blame Carter and Vulkar for much of what transpired from 81 and in ' 82. The Trump administration does not have that luxury already. America is like, "Biden, who?" They're like, "Who who is that? I don't even know what you're talking about." They're also asking the public to significantly renegotiate its relationship with consumer goods. Period. would say beyond consumer goods, I would say they're asking them to renegotiate like the very terms of which

14:40 they understood their economic life and like that is again you know you don't there's America if we look back like they are really only going to tolerate that in a time of war like and and even then people are going to get pissed which is also where Reagan was successful. Yeah, that's true. Because we had the Cold War. Very good point. You I was reading I think there was a in during World War II there was like a national speed limit of like 35 miles per hour to conserve people hate disgusting hated it but they were able to tolerate it because they're like okay you know we're in the middle of a war but basic like the moment that uh I think the Japanese surrendered they're like yeah we're driving 50 miles an hour now okay like the shit's over like where's my goods I need some I need some serious return for 4 years of lack of food and of driving super slow uh even

15:25 though we didn't even have any highways or thing back in the time. So, you know, America's always kind of been that way. You're full of fun facts. Yeah, it's always fun times, you know, over here. All right, let's go to the next one, shall we? Uh, this is about the bond market. So, to resurrect the Joe Weisenthal term, uh, the bond market is the real deep state. A3, please. And what you're watching there is that the long-term bond yields are absolutely blowing out right now. And so, look, obviously these things are variable, but uh as of this morning, we saw a 4.9 uh you know, yield on bonds, which is like on the 30-year bond at 4. The the again, let's let's remember why this is important, which is that this means that debt servicing, interest rates, and all of that are going to be more expensive

16:13 for the government. It also means that there is a either selloff or lack of demand for the United States dollar and for our bond. The very credibility of the United States financial system and of the United States like I I don't even really know how to describe it because it is so consequential. Remember it's the bond market that was a uh took down uh Liz Truss as the prime minister. But it's important just to remember that when you see that happening, it is a direct contradiction of the stated goal of the Trump administration because one of the ways that Secretary Besson was giving people a lot of cope is he was like, "Yeah, the equities markets, they go up, they go down, etc. But the bond market, if we're able to do that, because traditionally that's usually

16:58 what happens during a downturn, well, that will be overall more beneficial to us consumers, to our financial system, for the US Treasury." But instead they've had the exact opposite which definitely indicates foreign basically fleeing of the dollar and a lack of confidence in overall US markets. So that's what a lot of us are looking at. Again uncertainty and I think fluctuations we see yesterday um were because of the I mean I I would argue that a lot of it was a reaction to the tripling down of the attacks on Powell. just because it creates uncertainty. Of course. I mean, and that's I was talking with some people yesterday. I go, "Why?" Yes, cuz you know, we saw like a three something% drop in the S&P 500. And there was I mean, by the way, that's the funny thing. Somebody said they're like, "We're so desensitized that a single 3% drop is like eh whatever." I'm like, "No, that's actually a lot." uh you know

17:44 if you look over the you know if you look over the traditional time horizon like this amount of complete like up and down you know in a single day without any market re without like an announcement of bad earnings or a major policy announcement and everybody's kind of just collectively like this doesn't seem to be going that well that's actually a really bad sign because it means that the slide can just continue. Keep in mind we're recording this earlier in the morning so let me take a look at the futures. Uh yeah, S&P is up by like 7%. It's not great. It was like, you know, still down obviously from where we were whenever we began even on Monday. Uh and actually, you know, Joe Weisenthal again flagged something which I thought was absolutely harrowing for the private markets. Let's go ahead and put A4 up there on the screen. He says,

18:31 quote, "Blackstone is now down 40% from its November highs and is now right back at its post liberation day lows. Remember, this is probably the bestrun manager of private assets in the world. So, just consider how your run-of-the-mill private equity or VC shop is looking right now. You know, why I found that so important is uh I'll never forget, so the very first person I ever spoke to who told me that there was going to be major economic problems was actually David Saxs. And it was an interview, I think I did it with him back in early 2022 before even the invasion of Ukraine. And I remember him telling me, he goes, you know, VC valuations are down massively. And because this is the bleeding edge of the financial system, when we're watching

19:16 like lack of liquidity and uh overall just like lack, you know, lack of investment and VC valuations and all that stuff start to go down, that's usually an indication where the private markets are for where the public markets will head soon. And I would say maybe within three or four months, everything that he said h ended up correct. And I was like, wow. So that gave me a lot of respect for some of the insight of where these private market entities can tell us about not only valuations but also of what future behavior will look like. So you know if you're Blackstone you're down 40%. You have to start selling stuff like soon. You know you're you're getting pretty close where if you're going to half your value from November like you're going to have some serious pressure from your investors. And these people unfortunately again I don't want it to be this way. They control a lot of stuff. And so if they offload, you know,

20:02 single family houses that could have a major impact. If they offload, you know, I mean, they control so many major companies or stakes in companies and or and this is the worst possible outcome. What do these private equity goons always do whenever there is a downturn, they fire people? Cocaine. Yeah. Well, yeah, that too. Uh, actually, no, they're not doing cocaine cuz they can't afford it anymore. That's right. Um, no. So, they're uh they're doing what what's legal cocaine now these days? I don't know. Celsius. They're they're drinking tons of Celsius. But the problem that we see for them is when they have to offload and then they come in and they just gut these companies. And you again, you see tiny little signs of this. Southwest getting rid of seating, right? Jacking up its rates, trying to add

20:47 first class. You see already, you know, the airlines are always a classic example of recession indicators. We're going to see many other businesses which Blackstone again unfortunately does control along with a lot KKR all of these major shops. They run massive businesses that employ millions of people across America or they own stakes in them and as investors they're going to put pressure on them to probably reduce headcount so that they can increase their overall share price. So I actually thought that that was one of the more important ones and also you know the indication there on venture capital and on private equity like that when that stuff starts to dry up again we saw major problems in our markets in 2022 and in 2023. Well I just want to say before we move on that underscores I mean that's why I think again this question of certainty and strategy and

21:32 you've been making this point all along but like there was to your point about David Saxs having these insights literally years ago. There's a pretty optimistic um I think I was more optimistic than you when Liberation Day was being teased and rolled out because there this is actually based on some like very accurate and unpopular um I think understandings of the United States economy. Sure. And so there was a way that with a strategy, with coherence, and with a sense of purpose and certainty, everyone looks like they're walking in step. This would have actually done something pretty interesting. There definitely would have always been short. Well, let me clarify. I was never not optimistic. I was I had a baseline level of optimism until that chart came out. And when I saw that chart, I was like, "That's it." And I

22:19 knew I I'll never I will never forget it. And I was like, "Holy shit." What? Looking at that and seeing what the 50% whatever tariff on Vietnam, I was like, "Yeah, this is over." And I mean, and that's and then learning about they still could have recovered from that, right? Like they I think they could have they could have easily come out the next day and said we'd talked to Vietnam overnight and came but they I think for me it was that you know within hours we learn the way that the trade that the actual calculation happened and then when you learn that that level of care went into the stewardship of the global economy that's when I was like sell you know it's like the biggest sell signal I've ever seen. I was like nothing that these people do really they may stumble into something good but intentionality or planning behind it. No, no, no, no.

23:04 And I think that's really I mean that's why the markets tanked as well. You know, a 10% uh universal tariff again I I mean I don't think it's a terrible policy. We could we could talk about it all day long. Uh it's one of those where if it had happened there definitely would have been obviously a market correction of some kind. But I genuinely don't believe it would have been similar to today where we have wild swings of up and down. And I can tell you this 10% is still even if you think that that's crazy that 10% is still much more certain than the that we're dealing with right now. Yeah. And that's the problem. Yes. Where they face. We're watching this all play out. And uh I mean really the signal to me it's not just about China, which we're about to talk about a lot, and the level of care that they're able to put into the

23:49 stewardship of their economy. It's watching the other countries have to deal with this. The US allies, the people that we genuinely do need like the Japanese, the South Koreans, the Vietnamese, and to watch Xi Jinping get heralded on the streets of Vietnam. You know, again, a country which is basically, you know, in a conflict with China over the South China Sea, which doesn't necessarily like, you know, they have complicated relations with them and complicated relationship with us, but broadly a population of people which love the United States even though it destroyed their entire country. It's kind of amazing actually. and they and then to see them immediately host X shei and Xi going to Vietnam and then giving a speech about aligning with China and then watching same in Singapore and many of these other countries which these are very important to the future of the

24:35 globe because 50% of global GDP will be there just in 5 years and they feel deeply abandoned I mean from the J that all the stories coming from the Japanese are insane they show up here in Washington in good faith and they're like So, what do you want? And they're like, well, what are you offering? They're like, but we literally don't know what you want. And you know, you know, not just even culturally for them, they're like, this is a clown show. You know, in in in Japan, you know, in their business culture and all of that, when we just think about respect and certainty and consensus and who to trust, like they have very well and clear defined avenues through which decisions are made. They along with us have no idea if they can even trust Secretary Besson or if they can trust

25:22 this per or the US trade representative and then they watch the US trade representative learn about the 90-day pause when he's giving a a testimony before Congress. So if if that guy's sitting across from me, I go, "You don't know anything. I'm not talking to you. I just want to talk to Trump." And then Trump makes him wear wear a MAGA hat that he signs in the Oval Office and put it on for a photo opportunity. Yeah. Yeah. I don't know if you I feel for them. I really do. And it's not a joke, right? Because it's the f future of their economy. It's the future of our economy. Well, I was going to say it changes their own political calculations which is already happening. Yeah. There's a decent argument being made by Eric Kaufman, Matt Cottony, and others that what's happening is actually the undermining of global populism, which Donald Trump has tried to fuel, has actually like sought to to build up. And

26:07 because people are now responsive to their own economic needs at home, Canada is a really good example of this with polyv, you have to come out swinging against Trump. And so it completely changes the incentive structure. That's a great point. I hadn't thought about that, but it's exactly right where, you know, you're actually empowering more establishment forces in the European Union, in Japan, in I mean even Javier Malay is counter signaling Trump on the tariffs. like you know you've lost basically right I mean this guy is like what probably the most MAGA that there is in Latin America. All right last part here this is just this is too much. Uh at the very same time this is all happening for us. Secretary Bessant for some reason that is will remain completely uh unknown to me decided to

26:54 put out a lecture on his Twitter account of financial literacy and savings for Americans. Let's take a listen. Everyone should care about financial literacy. Whether you are a student with a summer job or a part-time job during school, whether uh you're in college, whether you're starting your career, or whether you are at the end of your career, uh making good financial choices uh creates economic security. And look, it it's fun. You you learn about the markets. you learn uh how to properly allocate resources and there's a big payoff the over the long term for something you can do ear early in your career. I couldn't

27:40 believe that you know the tonedeafness of this uh near billionaire secretary of the treasury at a time of financial stress trying to tell people about savings and financial literacy. It's like why don't we leave that to Dave Ramsey? Okay. It's like uh may maybe that's your real beef with it is that they should have just had Dave Ramsey. Yeah, they should have just had Dave come in and get Listen, at least guys consistent. He used to at all the time. Dave Ramsey's the best. Yeah. I mean, look, you know, Dave is the goat as as longtime watchers know, at least from my uh perspective. But I just thought it was unbelievable like to put that out as and it's just this lecturing and this hectering about savings. It's like listen, he's not wrong about the benefit of saving or learning financial literacy or any of that. and I totally support it, but now is not the time to be

28:25 putting out these types of public messages basically trying to signal like everything is for you, right? Like you need to learn public markets. Meanwhile, I'm one of the most powerful, you know, individuals in all of American finance and I'm like screwing with the bond markets and all the nuking your 401k or your 529 plan. That's a good point. So, so best like I can nuke your 401k with a single word. Meanwhile, you better get your financial literacy in shape, which is because like it's not wrong. Like because our market is so convoluted and ridiculous and built on this house of cards, then yes, you should absolutely be very you should basically go full Ted Kazinski and build a cabin in the woods because they can tank

29:12 whatever you save for decades with a word. Bingo. But rather than fixing that structure, you should just gold. Uh, in the words of Dave, debt is dumb and cash is king. Hey, if you like that video, hit the like button or leave a comment below. It really helps get the show to more people. And if you'd like to get the full show, ad free and in your inbox every morning, you can sign up at breakingpoints.com. That's right. Get the full show. Help support the future of independent media at breakingpoints.com.