Why Is Trump Nuking Markets? | Felix Jauvin

Summary

• The forced sellers are exhausted — all three are buying. Friday was the most active single day in US equity market history by shares traded, gold fell alongside everything (the tell of pod-shop liquidations — “likely Balyasny or Millennium or Citadel will fire the portfolio manager, delete their login information”), and Jonah’s rule from the crypto pod applies: big volume plus falling open interest “usually gives you a sign that the move is almost done.” Avi bought equities “hand over fist” Friday, Avi is scaling toward a 460 SPY line in the sand where he’d be 100% long, Jonah waits to “buy a green shoot style rally.”
• The tariff formula itself is the bear case. Calculating rates by dividing imports by exports “takes away the logic of a lot of it” — Vietnam offers zero tariffs and Trump says no, with only “vague accusations of currency manipulation” left to negotiate against. Consensus has flipped from “negotiation tactic” to “maybe these things are sticking around for a while.” Avi’s split: rest-of-world tariffs are negotiable, but the China tariffs stick — Trump has wanted them for 40 years.
• The endgame is a new WTO without China. Felix’s blue-sky read: extreme tariffs on China (150%), negligible tariffs on everyone else, with Ursula von Lean’s 0-for-0 offer and Israel at zero. Steven Moran’s speech spelled out the burden-sharing menu — including countries that “can simply write checks to Treasury” — and Jonah frames China’s Treasury selling as a controlled demolition: force them out now rather than let them nuke US financing costs in a hot war.
• Bessant leading Japan talks instead of Lutnik is the pivot signal. Whether it’s good-cop/bad-cop or a sidelining, “the outcome is still the same on the margin of what’s priced” — the only headlines from here are negotiation headlines, and markets are priced for the worst. The fake ETF headline that sent NASDAQ up 7% in 10 minutes is the template: “imagine what’s going to happen on a real announcement.”
• Trump has a political stop-loss. Felix rejects Larry Frink’s another-20% call: “I just don’t think there’s enough political capital in the world for a president to tweet the stock market down more than 30%” — 60% of Americans own equities, midterms loom, and a blue wave could bypass his veto.
• Rare Avi bullish-Bitcoin call, on a two-month horizon. Deglobalization shuts down channels of global commerce while demand for cross-border assets persists — crypto “gains a piece of that pie.” Avi’s short-Qs/long-BTC thesis continues: every other country must stimulate to offset a shock Brad Settzer compares to oil rising $70 overnight. Felix says Bitcoin can make an all-time high on global liquidity alone — though a real altcoin breakout still needs the US to play ball. Order books are “ridiculously stacked” from 65k to 73k.
• Inflation is done and Powell is playing theater. The 20% equity drawdown is “the last shoe” — per Catrini’s K-shaped analysis, asset prices were what kept inflation above target — inflation swaps beyond one year are cratering, and oil is around $60 and heading down another $10-20. Felix’s non-consensus read: Powell is ecstatic and holding a hawkish line only until May, when he can cut “with confidence.” When VIX is 50 and equities are down 20%, “you sort of just have to buy a bit.”

Deep dive

1. Liberation Day Broke Playbooks

• Felix’s setup going in: 50/50, finger on the green or red button. The Wall Street Journal’s initial 10% flat-tariff headline was “pretty strong on the lower than expected side” — he bought — then “the almighty chart of doom came out,” he exited at break-even and dumped nearly everything else. His edge as a solo trader: “I could just pretty much get out instantly,” while pod monkeys, multistrats and CTAs spent the next three sessions catching up.
• Jonah’s core objection is analytical, not political: calculating tariffs by dividing imports by exports “takes away the logic of a lot of it.” Vietnam comes back offering zero tariffs and Trump says no — “there’s all these other things you’re doing” — with no real explanation beyond “vague accusations of currency manipulation.” That’s what makes exit calculus so hard, and why even “the top 25% of bears” who saw this as a negotiation tactic have flipped to “maybe these things are sticking around for a while.”
• Avi owns being wrong: he was bullish coming in, expecting “one of those little 5% pullbacks that you can buy with both hands.” His self-critique — “he fooled us in the same way that he’s fooled so many people”: Trump says outrageous things, acts on few, and everyone priced the pro-business president while ignoring that “he’s been talking about tariffs for 40 years.”

2. Forced Liquidation Signals A Bottom

• The tell of forced liquidation: gold going down with everything else. Jonah’s read from his pod-shop network — “a lot of pods have blown up” in the past month and a half — and the liquidation process is inherently sloppy: “likely Balyasny or Millennium or Citadel will fire the portfolio manager, delete their login information, and then somebody else at the fund is responsible for liquidating that particular book.”
• Friday was, per the Daily Shot, the most active single day in US equity market history on both dollar-notional and shares basis. Jonah’s crypto-derived rule: “when you see big volumes and a reduction in open interest, that usually gives you a sign that the move is almost done.”
• Avi’s timing tell: on Liberation Day itself gold was up and markets reacted “the way it was supposed to react” — but once everything went to correlation of one, “you can say, okay, I’m going to start nibbling.” His caveat on why forced selling is the best and scariest buy: normally “somebody else knows a lot more than you and somebody else is probably selling for a reason that you haven’t figured out yet.”

3. Tranche Into The Bottom

• Felix’s March 2020 scar tissue drives his method: he had a shopping list, kept waiting for “the next leg lower” to “bottom-tick it to perfection,” and missed the pico bottom. The lesson, from his Forward Guidance roundup with Tony Greer and Jared Dillian: “you have to eat a few [shit] sandwiches before you really catch that bottom.” He’s been eating those sandwiches on the way down. “Equities down 20% — we’re getting into pretty decent pricing of a recession.”
• Avi’s structure: pick the level you assign a 5% probability — for him 460 on SPY — deploy 80% of capital scaling in before it, and shove “absolutely everything in” only there. “I’m never fully filled unless something literally insane happens. I think that’s a bit of PTSD from March of 2020.”
• Jonah’s variant — he’s done with knives: “I don’t want to try and catch the falling knife. I want to try and buy a green shoot style rally… I may miss a V-shaped recovery, but I’ll certainly catch a U-shaped recovery.” Meanwhile: strong balance sheet, never a forced seller, “not selling a dime worth of risk assets.”

4. Tariffs Scar The Economy

• Jonah’s puzzle: unlike a pandemic or the GFC, “this very much feels in the control of one guy and he could unwind it with a tweet” — which makes it either a far easier buy than those crises or a far harder one “because maybe Trump is just so insane that he’s just going to keep pushing the envelope.”
• Felix’s pushback on “everything was fine before”: it wasn’t. He’d flagged a growth slowdown since mid-December — labor-market softening in the weeds data, a fragile economy, “highly overvalued US equities” and institutional books all-in on the “never need to own rest-of-world equity again” trade. Not recession-sold yet, “although it’s very close right now.”
• Even a full Wednesday reversal doesn’t undo the damage: imports have landed, hiring plans and capex are delayed. “Would it completely revert? I don’t think so” — but it would be enough for “a very solid bounce and rally.”

5. China Is The Endgame

• The through-line both sides converge on: the chaos is about aligning the West against China. Felix’s blue-sky scenario: within three months, “basically a new WTO that doesn’t include China” — US agreements with Japan, Ursula von Lean’s reported 0-for-0 offer, Southeast Asia, LatAm and Canada, while China faces 150% tariffs as the trade war escalates.
• Jonah read out CEA chair Steven Moran’s burden-sharing menu verbatim: accept tariffs without retaliation, open markets, buy US defense, build factories in America — and fifth, the one that stopped him: “they can simply write checks to Treasury.” Paired with the century-bond talk (hundred-year zero-coupon paper foreign governments hold as “a cost of doing business” for the security umbrella), the architecture is explicit.
• Jonah’s controlled-demolition frame for the Treasury selloff: if you’re targeting China, you don’t let them “accumulate all of this leverage and sit on it until the moment where they could use it the most… imagine a hot war breaks out and suddenly the financing costs on America’s debt go through the roof. Might as well force them out now.” Felix thinks Monday’s bond selling was mostly rebalancing flows, “but it’s definitely something to think about.”

6. Bessant Signals Negotiations

• Felix’s key signal of the week: Scott Bessant, not Lutnik, leading the Japan negotiations. He’s 50/50 between “oh shit, 20% equity correction and bond yields still surging — sideline Lutnik” and deliberate good-cop/bad-cop — “it doesn’t really matter what the outcome is. We’re going from this insane rhetoric to somebody who’s a lot more measured,” and the market isn’t priced for negotiation headlines.
• Jonah’s frame for the opening chaos is Zoolander — “Don’t you know I’m Loco, man?” — plus Queens real estate: “How much for your building? It’s not for sale. A trillion dollars.” Going over the top makes foreign leaders choose the negotiating table over retaliation. The fake ETF headline that put NASDAQ up 7% in 10 minutes is the bear-market-rally template: “imagine what’s going to happen on a real announcement.”
• The floor, per Jonah: “I just don’t think there’s enough political capital in the world for a president to tweet the stock market down more than 30%.” He doesn’t believe Larry Frink’s another-20% call — 60% of Americans own equities, a blue-wave midterm could bypass Trump’s veto, “and that’s not what he wants.” Jonah also says there’s a point “where even Trump feels pain,” since consumption comes from the asset-owning top 20%.

7. Deglobalization Boosts Bitcoin

• Avi — short-term bearish for months — is now “pretty damn bullish” on a two-month horizon. His value-and-momentum framework needs Bitcoin to become a value buy either via price ($50k territory psychology) or good news, and the news is here: “we have kickstarted a slow roll into a deglobalized world… if you shut down a ton of different valves of commerce between countries but crypto still exists, then crypto inherently gains a piece of that pie.”
• Jonah’s concrete version: in a multipolar world commodities become barter media, the way India became a “transshipment hub” buying Russian crude while trading with America. Bitcoin ends up “an alternative reserve commodity/currency that can intermediate between different geopolitical hemispheres.”
• Avi’s expression, put on at the Digital Asset Summit: short Qs, long Bitcoin, vol-matched — the US retrenches fiscally while everyone else stimulates in reaction (Germany’s ~$500B defense package, headlines today of China frontloading stimulus). Bitcoin reflects global liquidity; the Qs are US-specific. He sold “a little too early” — Friday, with Bitcoin resilient and NASDAQ down 20%, would have been a great exit — “but the thesis remains.” Brad Settzer’s frame for the shock: “imagine global oil rose 70 bucks overnight” — a growth hit every other country must offset.
• The ceiling, per Felix: marginal global-liquidity improvement can deliver a Bitcoin all-time high on its own, but “for meaningful breakouts and for alts to really start to perform, we do need the US to start to play ball” — and per liquidity analyst Michael Howell, “things get really hairy in the spring/fall.” Jonah adds the mechanical tailwind: M1 money supply leads Bitcoin by ~3 months and bottomed three months ago.

8. Bitcoin Flows Turn Constructive

• Avi’s microstructure case: the sellers are people up huge or short-term momentum shorts, and order books are “ridiculously stacked” from 65k to 73k. Bitcoin outperformed partly because momentum traders didn’t need it — “I can just sell equities” — and the Sunday selloff was positioning: betting on equities opening lower with the only thing that trades on a Sunday. Jonah’s coinage: “Bitcoin as weekend spoo.” Bitcoin reverted to 76,000 Monday morning, and Avi said he was “a lot more excited.”
• Avi’s actual Friday trade: long alts against short ETH and BTC into the collapse. “Alts are to Bitcoin what Bitcoin is to equities — they’ll often bottom before Bitcoin does because everyone sells that first.” Near a bottom, alts have limited downside relative to majors and bounce harder — “historically an extremely good trade.” It worked.
• Fartcoin, up 23% and the greenest thing on Avi’s board, gets read as pure retail sentiment: “imagine buying Fartcoin at Millennium, losing money on it, and your division manager comes up and says, ‘You lost money on what?’” — it can never be institutional, so its bounce means “maybe the degens online have finally drawn a line in the sand.” Jonah’s broader concession: “inverse alt season is the new alt season” has run its course — “I wouldn’t want to be short anymore. You’re playing with fire at these levels.”

9. Inflation Is Done

• Felix’s non-consensus call: “I think Powell is ecstatic about a 20% hit to equities.” Per Catrini’s K-shaped analysis, the bottom ~80% have been in a soft recession for years; consumption comes from asset owners getting richer and earning 4.5% on cash — so “the biggest reason we haven’t seen inflation come back down to target is literally stock prices.” The equity hit is “the last shoe that needed to be dropped.”
• The evidence: one-year inflation swaps are a bit higher on the tariff price-level step, but everything beyond is “cratering.” Oil broke a key level and is around $60, and Jonah sees “another 10, 20 bucks” lower absent Persian Gulf kinetics — with the oddity that crude is selling off in backwardation, a sign OPEC+ is still propping the market and could get stopped out. “Inflation is done. Unless you get a hot war, it’s really hard to imagine inflation coming back.”
• So why did Powell sound uninterested in cutting on Friday? Felix’s answer: Fed theater. Talking dovish a month before the meeting buys him nothing; holding the hawkish line ensures inflation “gets durably bottomed out” so he can cut “with confidence in May onwards” — the 2018 NASDAQ-down-20%-then-pivot rhyme. Market’s fading him anyway: 2-year at 3.78 vs Fed funds at 4.33, roughly three and a half cuts priced, “which seems fair for not going into a recession.”
• The closing register: “if you get a VIX at 50 and equities down 20%, you sort of just have to buy a bit.” Felix: “Don’t be a [wimp]. Just get in front of it, man. This is what we live for.” And the episode’s mantra: “this is not about betting on global collapse. This is about figuring out when this particular show is going to end.”