The clarity of customs cannot come soon

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good morning. Yesterday, a survey by Bank of America’s Follow Global Fund Manager showed the biggest decline in US stock allocations and a major jump in cash allocations. As the research’s lead author Michael Harnett points out, this is bullish if other investor sentiment indicators (for example, a massive transition to finance) follow the lawsuit. Market revisions don’t stop until the optimist ends are kicked out.

In terms of economic data, both new home launches and industrial production have exceeded expectations in February. More bullish? No: Wall Street economists have rejected both reports as the last harray before tariffs and labor market uncertainty next month’s figures. The stock market agreed to this Dour Assessment, and Big Tech in particular was another ugly day. Email: robert.armstrong@ft.com and aiden.reiter@ft.com.

Markets can’t wait for April 2nd

The decline in the US market, which began a month ago, is primarily a worrying product about the Trump administration’s economic policy. It is universally agreed. There is little agreement on how much of the issues that are the outlook for a policy that reduces a company’s revenue, and how much of the total lack of clarity about exactly what the policy is.

Over the past few days, Wall Street people have told me that they hoped the fog would be revealed on the day my client chose to announce both mutual tariffs on the country and sector tariffs on strategic industries.

Can I get clarity in my policy in two weeks? Or is confusion even more troublesome? In the short term, there is no more important determinant about market outlook.

Macquarie’s Thierry Withman clarified investors’ wishes in yesterday’s note (my Italics):

With the inauguration of new US trade representative Jamieson Greer, there is new hope that there will be more regularization and rationalization of the US administration’s import tariff policies and programs, as well as more negotiations with trading partners. We believe that there is a “peak of chaos” behind us regarding tariff policy. . .

The new USTR is reportedly likely to create a single rate formula for each country based on the average tariff level of that country, with other measures that Trump teams consider to be discriminatory. . . These tariff rates are not static and can be adjusted based on whether the country is a cooperative when lowering tariff rates. I think this shows new flexibility

I spoke to Withman yesterday and it is important to note that I believe that there may be considerable ambiguity from April 2nd onwards. However, he believes that more regular and predictable traditional policy processes may soon take hold. His reason is that even if the administration says it, he knows that policy disruption is causing real damage. And he is encouraged by the hints in a recent news article that new approaches are taking shape.

On Monday, Bloomberg wrote about Greer:

President Donald Trump’s top trade negotiators are trying to inject order to wipe out new tariffs expected next month. . . Through the tariff turmoil of the past two months. . . Greer is mostly out of the picture. . . Under Greer, USTR is seeking public comment on mutual obligations, some of the traditional policy processes lacking from previous tariffs imposed on Canada, Mexico, China and metals. This provides the Department of Trade with a formal way to receive feedback from businesses and other stakeholders.

Most importantly, the article stated that officials like Scott Bescent and Kevin Hassett “expressed the urgency to move forward with the tax cuts and regulations rollbacks that investors are craving.” All of this sounds very promising to fans of orders, predictability and profit.

And yesterday, the Wall Street Journal reported that the White House was heading towards mutual tariff planning (planning concept?). The three-layer approach, designed to avoid country-by-country and product-by-product rule writing, was considered and discarded in favor of a “personalized approach” with “more flexibility.” How to convert tariffs, non-tariff trade barriers, industrial subsidies and currency management into a single tariff rate for each US trading partner partner is currently under discussion. Meanwhile, a 25% tariff has been added on cars, semiconductors and pharmaceuticals.

Yesterday morning, Treasury Secretary Bescent appeared on television with clear intentions to try and reassure him. He confirmed that countries face individual tariff rates and emphasized their willingness to negotiate. If a partner country removes trade friction, tariffs will be reduced. For strategic industries, tariffs remain. He also said there are 15 countries where the US runs a major deficit, the focus of its administration’s attention (“The Dirty 15”).

The administration is trying to convey clarity directly and indirectly. But it doesn’t hide the remaining ambiguity.

Bessent didn’t make much clearer what industries he thought were strategic, besides steel and aluminum. For example, whether or not the list includes medicines makes a big difference to the market. Drugs have been widely assumed to be carved, as they often have in the past. And whether the tariffs are “studied” – if retrograde tariffs come above strategic tariffs, he became vague and said that the trade representative and the Ministry of Commerce are in charge.

It leads to two comprehensive questions. First, can this administration line up behind a single plan, as coordinated by Greer or someone else? And how do other countries respond? What is the mix of negotiation and retaliation? These answers work over time, but investors need a roadmap from the US side first.

Unseeding doesn’t make predictions on April 2nd and isn’t good at politics – nothing more than saying that it will actually be a very important day. If you have insights, please send them anyway.

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