.It is completely impossible to get inside the head of Donald Trump, but the bond market and how close we apparently got to Fed intervention to boost liquidity must have played a significant role in yesterday’s tariff pivot. Maybe it was about the votes for his budget resolution in the House of Representatives.

Who knows with any certainty why President Trump changed his mind?

For me, this is less about the catalyst and more about the politics of the workings within the White House. Whether these market concerns stem directly from Bessent, we will never know. But it appears, given that he was the only one at the Rose Garden press conference, that the extreme tariff hawks—i.e., Navarro and Lutnick—appear to have been ostracized.

That is not to say that we have a clear agenda of the Trump administration seeking to slash global trade barriers and negotiate deals across the globe, but it appears extremely unlikely that the numbers we saw on April 2 will ever come to fruition. From that standpoint, it’s a positive, but how much of that was reflected in yesterday’s price action?

This is now the fourth time that Trump has deferred the implementation of a tariff policy plan. What happens in 90 days is anybody’s guess, but it is really difficult to negotiate trade agreements in three months with one trading partner, let alone 75. My best guess is we meander along between more draconian policy announcements and the deferral of the implementation of those tariffs for the balance of the year. Market volatility may be considerably less than what we have witnessed, but it’s going to be more of the same back-and-forth as we’ve seen so far.

From an equity market standpoint, we’re not going back to business as usual. Global corporates have witnessed the chaos of Donald Trump trying to get better deals for the United States, and it is very difficult to see how the events of the last week don’t force companies to be much more conservative in the quarters ahead. While the deep recession that I believed was inevitable based on the numbers we saw on April 2 is not going to come to pass, I do feel that a significant slowdown is coming because companies simply cannot plan in this messy environment.

125% tariffs on China are going to boost costs, and the stagflation that we all feared will crystallize. That is a horrible environment for forecasting earnings, and I do believe we will test 5000 in the S&P in the weeks ahead.

This has morphed from a global trade event to a direct economic conflict with China. While this is going to be incredibly problematic for companies like Apple, it is not as dire as the outcomes that would’ve played out from the full implementation of April 2. But to be clear, this is far from positive. It is just a much less negative outcome. China will not cave, and what we’re about to witness will be much, much worse than the China conflict we saw in President Trump’s first term.

The dollar faces cross currents. The USD should weaken, yet China appears determined to make its exports more competitive via its currency. Asian currencies face considerable headwinds, having to deal with CNH weakness and USD weakness as markets stabilize. My best guess is that Asian currencies will weaken, as they don’t want to lose their competitiveness with China.

Overall, this is a Band-Aid on a self-inflicted wound. I think the long-only crowd globally is going to use the strength to lighten up further and focus on the economic outcomes, which have morphed from catastrophic to deeply concerning. That is an upgrade in my world. A recession is still coming—but not as severe. Trump has done lasting damage to corporate sentiment.