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Liberation Day crashes markets
Recorded: April 3, 2025 Duration: 1:06:29Space Recording
Short Summary
In a recent discussion, the impact of new tariffs on the crypto market was analyzed, revealing Bitcoin's volatility amidst economic uncertainty. Key announcements included DTCC's launch of a tokenized collateral management platform and Camino's competitive swap platform on Solana, indicating significant trends in the crypto space.
Full Transcription
Good morning, everyone. Welcome to the modern market where every day we discuss everything
to the modern market. That is the crypto market, the NFT market, and whatever Trump and the
administration are doing on any day. That is what is affecting all markets every single day. So that
is what we're going to have to give some time and attention to specifically liberation day tariffs.
We'll be getting into it today amongst a couple of other
things. We've got Liberation Day sending markets lower, reciprocal tariffs were announced on all
countries. Bitcoin dropped from 87k to 83k, all kinds of other implications for the market,
which we will discuss in a bit. We've got DTCC, the Premier Post Trade Market Infra for Global
Financial Services Industry, announcing a new platform for tokenized real-time collateral
management. It's a bit of a mouth mouthful but it's kind of significant headline
too and we've got Camino announcing the swap platform on Solana aggregating across all major
routes bringing real severe or serious competition across the Solana apps now as they all seem to be
competing with each other so that is the final headline for the day. We've got a also a bit of a general
discussion on markets. We've got an explainer on tariffs. We've got some thoughts from Smokey,
from Bearer Chain on tokens. So we'll get into all of that and more today. I've got Legendary
in the co-host seat with me. We're ready to get into it. But just to remind friends that nothing
that we say on this show is financial advice. The market is very risky, very unpredictable,
and we don't know anything for sure. So please proceed with caution and exercise your own
judgment after you've done your own research. With that out of the way, Legendary, it's
Thursday, it's the 3rd of April. How are you doing?
GM, GM, what a show to get into today. Massive, massive news. Hope everyone is feeling liberated by this flood
of terrorists that have been announced. I'm excited to unpack that. I'm not happy about
the outcome, but from an academic macro, I mean, did go to business school, did study macroeconomics.
So from that perspective, I'm excited to see see this let's call it insanity this madness
come to life but not very happy about the outcome nonetheless i think it's going to be a super super
interesting show me too me too um specifically gave you that topic and no guidance today sometimes
sometimes i'm i'm i for people who don't for curious and like the behind the scenes strategies, like I'll set the
topics for the show and then I'll give everyone a couple of links that I thought were helpful
as part of my own research. Today's guidance for legendary on the tariff conversation was
nothing. There's nothing that I suggest because the real reality was it's not because there's
nothing I suggest. It's just, I had about 20 tabs tabs opened as well I'm not going to send you 20 tabs so I might as well it's either 20 tabs
or it's zero tabs so I gave you zero tabs just giving you the freedom to go in the direction
you want um any instinctive thoughts though before we get into the main stuff
it's not looking beautiful if you look at the charts right now.
It's going to be some industries
that are going to be massively hit and I have prepared
a little case study on something specific.
It's going to be
very, well,
fascinating to look at, but
instinctive thoughts are that
this is such
a complex mess that it will take a while
to unpack. So while we did our research and
we try our best to unpack as much as we can on the show, it's definitely a topic that we will
have to revisit over the next couple of days and probably weeks and months as well.
Yeah. Okay. I had two instinctive thoughts. Two instinctive thoughts were one,
is it as bad as we say? say like if you're just looking at bitcoin
which i appreciate maybe no one holds that's why everyone is so angry all the time if you're just
looking at bitcoin we're at the price that we were in fact we are higher than the price that we were
two days ago i think like 24 hours ago sorry no that's the wrong chart um 24 hours ago. Sorry. No, that's the wrong chart.
24 hours ago, we were, okay, that's a little bit ambitious as well.
Maybe three days ago, something like three days ago, we were at 81K.
And then for some reason, we just absolutely pumped into the meeting to go to 87.
And now we've lost the gains and people are saying that it's so terrible and we're at 83 and i put this tweet out yesterday and again we have said that all of this stuff is
kind of above our pay grade and it's very confusing to make sense of but if you just zoom out a bit
my tweet yesterday was one month of hysteria about tariffs and bitcoin is at the same price looks like we're unwilling to go lower on uncertainty which this move has been so i put
this out before before the news yesterday i i thought i said i would we would need something
materially bad and unexpected now to go much lower i thought more uncertainty which i think
is likely because if they have this max tariff,
which everyone can then have the option to negotiate down, which just extends negotiation
and uncertainty means we can range more. I kind of articulated that thought yesterday on the show.
That was, I just put that into words yesterday too. I still think that to be the case. Yes,
all of these headline numbers have come out on the tariffs yesterday but i think a
you're i mean you're going to do this in a little bit on the show you're going to kind of tear some
of them down so they haven't been either no it's not that they haven't been calculated properly but
they're kind of measuring the wrong thing potentially and so there's a bit of there's
a question mark against some of the numbers but b if they can be negotiated down anyway then that
extends uncertainty.
So I just think we carry on ranging, at least for Bitcoin.
Obviously, this is kind of bigger than Bitcoin.
There's all kinds of other stuff going on.
You will get onto those.
The second thought I had, maybe this is a bit broader.
I don't know.
I saw a lot of outrage, a lot of concern a lot of
unhappiness which i think is justified in some ways but i also think simultaneously i tweeted
this earlier i said we seem to be concerned about how much more expensive things are going to get
now and i thought it's just like we've been doing this already like we've been running up ridiculous
debt like for a long long time we've been artificially pumping property prices.
Everyone's purchasing power has been getting crated for a long, long time.
And so my only question mark is when people are using inflation as an argument against
this or that people's purchasing power is going to go down. It's like, I feel like that's been happening in a really, really aggressive way already.
And so those specific arguments, I'm not attaching much weight to because I feel like they should
have been made multiple times over over the last decade if someone really wanted to stand
up for those specific issues.
There are all kinds of other things going on with Taris
as you're going to get into,
which will impact a lot of people in different ways.
But those are just two instinctive thoughts.
Obviously, we're just kind of coming up with this live.
Curious for your thought there, Ledge,
and then want to go to Funky with his hand raised.
Yeah, I think that's a very fair perspective to take especially
on the first part that we're gonna keep ranging i've been reflecting that there's not much to
trade in this market at least for me you know i told you i'm farming my eidrops and farming my
stuff but why shouldn't i start to just trade btc more. We've seen it often now.
Obviously, there's no guarantee,
but we've seen it often
that whenever Trump is about to announce something,
whatever that something is,
and he announces a lot of stuff,
we pump into that news like we did yesterday
to an almost absurd scale,
going to what, 87, 88K almost.
And then there is the correction
after the actual information,
the actual data is out.
That volatility, I'm right now completely ignoring. So I'm either thinking to trade that
or to get more into liquidity provision so that I start to, I don't know, LP, CBBTC and USTC on base
or something like that. Yeah, that would be, I mean, you know, as soon as you buy it, it's going
to break out the range, right? As soon as you start LPEing, it's going to break out the range. It's like we've watched it do the same thing. God knows how many times now. That is almost inevitably what will happen, but that'll be okay. It's part of the fun. Funky, your hand is raised. Instinctive thoughts here on our early discussions here, Tara. So obviously we'll be speaking about it a lot more, diving into the specific details, early reactions.
I'm glad that you brought up that specific post
that you put out yesterday, B,
because I actually read it to Aaron this morning
because I think it's so spot on,
like that this is sort of fake outrage
about the whole inflation and tariffs
and things being more expensive.
I'm just going to say I'm a little bum this morning
because it didn't hit my limit
order when it dumped which i was hoping for to add some more btc to the stack but you know i thought
and just because we talked about arthur hayes yesterday i know i dropped this in the modern
market discord server but he had a little great post saying basically he doesn't expect anything
different and so far as maybe the lowest it goes is 76 and a half and we're going to probably just experience chop till now through tax day because and bread pointed this
out yesterday i think on the timeline that people are going to have to sell they're already bottomed
bags in order to pay taxes if they didn't take any profits in 24. so that's about the only thing
i can see for the next like couple weeks but you know, I'm just sitting pretty and stacking sats.
Like it.
Like the idea of stacking sats.
Just a quick point.
Saw Oxy with a question in the YouTube comments asking if we were still farming Sonic.
Someone else asked me earlier
what we're doing with our airdrop stuff.
Haven't tweeted about that stuff as much.
Kind of been doing a lot of research on it,
like figuring out all the new stuff you know
periodically seasons change right you you hit a bunch of wins and then those wins are done and
you know you've got to readjust and reallocate over a period of time one of the things we will
be doing is posting all of the things we like in one place it'll probably be in the discord
and we're going to be opening that up to everyone.
We've kind of just experimented with Discord first.
It was something very small.
And that's going to be opened up to everyone over at some point, at some point soon.
And one of the core features of that will be this list of things where we're just going
to keep tabs on what kind of protocols we like, why we're allocating in different places.
You know, it's obviously no guarantee in any way
that those things end up working,
but it's just so other people can keep an idea
and have a sense of what we like at the moment.
So I think that'll be helpful to people.
We'll share more information on that when we have it,
which we do not at the moment because we're building it.
Getting into the main stuff, let's do it.
It's got to start getting into it at this point.
The majors, what is going on with the majors?
We have Bitcoin is down a couple of percent to 83K.
Let's just, oh, yep, there we go.
So down a couple of cents to 83.
ETH is down 4% to, damn, it's's lost 1.8 it's at 1.796
1796 we got bmb down a percent to 594 soul is down eight percent to 116 dollars
so i'll get hit a little bit harder out of those getting into the meme coin side of things we have
doge down seven percent to 16 cents pepe's down 6%. Trump is down 13%. Bonk is down 10%. SPX, Morad's coin is
down 16%. Fartcoin is down 28%. You want to trade something just in a range, legendary, with a bit
of volatility. Fartcoin leads everything, every single time, up to the upside and to the downside.
So maybe take a look at that. Whiff is down 12%. Pengu is down 8%. Pengu's down
32% in the last, is that seven days? Yeah, seven days. Okay. Well, what else we've got? AI-16Z
sounds 15%. PopCat's down 15%. Mog is down eight. Turbo red. Everything's red uh so nothing else to say there getting into the main headlines
themselves we have um where are we've got liberation day sending the markets lower
reciprocal service were announced yesterday legend is going to break down everything you
need to know from that we've also got dtcc the premier post-trade market info for the global
financial service industry announcing a new platform for tokenized real-time collateral management. I think we'll have some time for
these other things. You'll see, I probably want to stick on tariffs for the majority of today's
show, to be honest. So let's see how we go. And then the other big headline, which I thought
would be interesting for people, whether we get there or not for a bigger discussion is Camino
announcing swap platform on Solana aggregating across all major routes. Seems like every single
app on Solana basically wants to do the things that all of their competitors
do as well in order to try to capture all the market share.
So that's the kind of hyper competition that's happening on Solana at the moment, which is
interesting to note.
Some notable price action, as I said, Sol's down 5%.
Hyperliquid's down 10%, dipping beneath $12 for the first time now.
Fartcoin down 22 on the nft side meme line captains down 15 percent to 0.65 eth uh all the nfts
were red that was the biggest mover legendary anything else we should keep up to date with
on the nft side yeah i mean you took it away all the nfts have cracked it down with one
notable exception which we have touched on yesterday and that is the steady teddies
they are holding up pretty well.
They are still sitting at 108 Barra.
Winters are still up around the 10x on that.
And despite that massive pump,
they haven't seen a massive, massive correction.
They're actually up another 8% over the last 24 hours.
Interesting.
Steady Teddies going pretty strong.
We spoke about them yesterday as a headline.
Okay, that's pretty cool. Getting into the rest of the news to keep you up to speed. You might
have missed this stuff in all of the tariff mania. We've got OnlyFans founder and HPAR foundation,
which is in charge of the Hedera crypto treasury bidding to buy TikTok. What kind of world? What
kind of madness
is this but okay that's fine that's what is happening got jupiter exchange expanding into
nfts by acquiring drip labs uh jupiter you know on a tear really just trying to expand its footprint
on solana uh coin list begins u.s token sales again with double zero sale after what they
described as a difficult chapter in american crypto history. I think they had to stop token sales, even to accredited investors in the states
for a while because of the regulations, whereas now they're starting them again. FYI, that double
zero protocol is pretty interesting, backed by some very big people. I think the only way to get
in is if you're a validator though. Worth double checking, I haven't looked into it more. If I
could participate in that, I would, but I don't think I can. Fidelity launches crypto-focused retirement plan,
letting investors trade in crypto. Say announced its development foundation will be headquartered
in Manhattan, New York. A lot of business moving back to the States. FTUSD de-pegged to 87 cents
after Justin's son claimed they weren't solvent yesterday.
The PEG restored very, very quickly after.
And it seems like whoever bought that dip was quickly, quickly rewarded.
Metamask announced gas fees can be paid in token swap currency instead of ETH.
Not ideal for ETH.
I guess you now don't need to hold it, even though the swap still uses ETH because it's
needed as part of the transaction, but you just don't need to hold it anymore. the swap still uses eth um because it's needed as part of the transaction
but you just don't need to hold that anymore so um that is that that's the way the roundup to get
you up to speed with everything else that's happening in the space in the last 24 hours
ledge before we get into the main tariff stuff today because i think that is where everyone's
attention is going to be that's where we have the majority of takes for today what is catching your attention from around
the space definitely the tiktok news i feel like let's let's not touch on tariff tariff related
news because the show is going to be heavy enough so let's get into the tiktok stuff actually
because a we talked about it on the show and b um the so the the situation is this donald trump
has said that the u.s business of t of TikTok has to be sold, can't stay
in ByteDance's control and that
transaction should have
happened by January
19th. They extended
that, Donald Trump did until April
5th. It's likely that there's going to
be another extension because
it's still not clear
ByteDance is even willing to sell.
There's obviously a plethora of people interested.
You had mentioned the OnlyFans founder.
You had mentioned the Hedera Foundation.
Amazon is also interested and has allegedly submitted a bid too.
However, we still don't even know, even if there's willingness to sell,
what that will include.
So is it just the US part of the business?
And that's where it gets interesting.
Where does it include the algorithm,
the algorithm that basically is distributing
the personalized videos and ads?
And analysts have looked at the different valuations
to see how much would it be worth without
and how much would it be worth with the algorithm.
And that difference is massive.
Just that you get an idea
where the value actually lies.
Without the algo,
most analysts say it's 40 to 50 bill.
So quite significant,
but another like absurd amount of money
given how relevant and how big TikTok is.
With the algorithm, if that is a part of the transaction as well, 300 bill.
So you can really see where the value lies.
It's not only the users,
but actually the majority lies with the algorithm.
Yeah, I think that that makes sense.
One of the things I think I listened to one of the investors say,
I don't know if you just mentioned it when you started that,
is that a lot when Trump was saying that you have to divest, when they had to sell the US part of the company, I think the original investors weren't too concerned because the China side is significantly more valuable. Is that something that you've
noticed or is that something you're aware of as well? Yes, because it's not the China side only,
it's the rest of the world side as well. And I think that initial assumption had included
the fact that the algorithm entirely stays with the Chinese side. So with the original part of the business.
But apparently this is unclear how that transaction, if there's going to be a transaction will
will shape out.
Okay.
Interesting stuff.
Yeah.
Glad you took that.
What about the completely random collaboration between OnlyFansFounder and HBAR Foundation.
Like, where's that come from?
Just presented with no explanation.
Who knows?
I don't know.
I just thought that was kind of funny.
These two disconnected groups of people connecting in order to just buy TikTok.
I love how Austrian media have titled that.
They said, Amazon, the porn industry, and Crypto Bros all want to buy TikTok. I love how Austrian media have titled that. They said Amazon, the porn industry,
and crypto bros all want to buy TikTok. That was the main headline in one of the Austrian
newspapers. Beautiful. Just trying to get those clicks. I see.
Justefano is saying we went from gym routines to only fans we are really down bad
yeah um down so bad that yeah they're the only people that can afford anything at the moment
um allocated to the wrong industry um so we've got a couple of other cool things well something
that caught my attention what do you think about this i feel like this is happening
more on solana so there's two connected pieces of news one's a headline which i don't know if we'll
get to later so we'll do it now and the second was presented in the later news you've got
camino announcing the swap platform on solana pump fun also the other day, you know, they are doing, so PumpFun obviously existed as
a meme coin launchpad.
Then they went into the, they went into Radium's ballpark by trying to take the business from
there.
They then had the swap platform.
Camino was a lending platform.
Now they want to be a swap platform.
Jupiter obviously started with swaps and aggregating and have subsequently
expanded into well a they're part either part owners of meteora or com complete owners of
meteoria meteora which is the place where people go and provide liquidity on solana and the one
that was implicated in all of the stuff with Kelsey adventures and the Libra
Libra coin and all of the scam coins, but also a bunch of other completely
legit coins as well.
Drift is obviously in that universe too.
And so Jupiter has also just bought drip labs, which was the creative drip house in order to expand into the nft universe
because if you think about it they haven't really didn't have a platform to be able to do that
two questions here one do you think that all of this do you think it's possible for there to be this all-in-one because i think a lot
of people have tried remember when coinbase wanted to enter the nft market um you had ftx actually
even had a an nft thing at some point in time people might not remember that but people try
to be the all-in-one place and i it's actually really hard. And you think about the successful protocols on ETH, something like Aave.
And there must be some wisdom in what they decided to do.
They're like, look, we're lending.
And they've just absolutely nailed lending, like over and over again, across every single
chain, they expand to all of the L2s as well.
And there's probably some wisdom in sticking to what you're best at and
creating your brand around that so i guess my question is twofold one do you think it's possible
to become the all-in-one and two why do you think it's on solana at the moment where everyone is
everyone seems to be trying to take it all at the moment um and does that have some negative
impacts for all of them uh in the process what do you think? I mean, there's two things that are true at the same time.
On the one hand, most of the stuff that is being built
is not unique.
So if you build a swap platform
as extension of whatever your business is,
I'm going to build my own swap platform as well
because it's pretty easy to do that
and you can also fork code to do that.
And then the second thing,
which sounds like a contradiction but
it's not if someone builds something truly unique so you actually come up with the better swap and
for whatever reason i cannot build that i'm gonna aggregate it i'm gonna build an aggregator on top
of that and that happens and has happened on eth for the longest time if if you go to DeFi Llama, you have an aggregator of aggregators,
even for swaps.
That is basically the meta-meta aggregator.
You have a borrow aggregator
that looks at Compound, Aave,
and so many more platforms.
Aave now, I think,
has this unique position in the market
because it's so robust.
It's so old.
It has, quote- has quote unquote withstood
the test of time in crypto which means a lot to many people and then therefore they're willing
to forego a bit of an additional yield when it comes to parking like the more conservative side
of their capital for lending or borrow purposes and i think it's just natural to see the same evolution happening on Solana.
We've seen obviously the hype with the meme coin trading that has settled down,
but the chain is still alive, still functioning.
Transactions, of course, are still happening.
And now I feel like it's the time to look left and right and see,
okay, what is my competitor doing?
Everyone's integrating a swap.
Let's aggregate that.
And that hyper competition, I feel is a result of the open nature of blockchains.
And to some extent, I do think it is healthy to have that.
And I also do think that there's gonna be an all in oneone platform because ultimately you kind of have
that with DeFi Llama already,
right?
Protocol
and do everything that you want
to do there. And why not have
the same for Solana
as well?
Interesting.
I think the interesting thing i've observed is that
even between chains it's been impossible to get people to trade in one place it was like
magic eden became the place to trade ordinals uh solana was the place to trade um sorry um tensor was the place to trade solana nfts blur
or um openc were the main nft marketplaces for eth denominated nfts and even though everyone kept
adding more possibilities for people to do stuff like it was just not possible to get people to to change
uh there's that kind of brand loyalty almost to the to the chain so i think maybe this approach
is better where you're trying to capture that activity within the ecosystem so because jupiter
is so solana focused it's like well okay well let's try to take the Solana NFT ecosystem too.
So I think there's probably some merit there.
I don't know.
These other teams are super well designed, and I'm not sure.
I'm not sure about the super app thesis, to be honest.
I think there's enough evidence to suggest we like things to be built out slightly differently
here for whatever reason.
But look,
I think what we want to do, we want to get into the main tarot stuff. That's the key,
key headline for the day. But before we get there, so there's two things we're going to do.
We're going to get into the tarot stuff and really analyze everything that you need to know in terms
of the details, plus our thoughts and the implications. And it's going to be a bit
complicated. But before we get there,
let's hit our sponsored segment for today.
We've got our Polkadot explorations
where we are routinely checking out
what is going on on Polkadot.
And this is cool.
And it's got a little bit to do with AI, Legendary.
What have we got here?
Yeah, absolutely.
This week, we're diving into NeuroWeb AI,
which is a decentralized knowledge network
bringing AI directly onto Polkadot.
And NeuroWeb AI is all about turning data into valuable and verified knowledge right on chain.
So the concept behind NeuroWeb is pretty cool.
Think of it like knowledge mining.
Instead of mining blocks like Bitcoin, you earn NeuroTokens by adding trustworthy data
called knowledge assets to the blockchain.
And those knowledge assets can be a lot of things ranging from a digital certificate for physical artwork to verified pieces of information or just verified
data where you can be sure that this data is accurate because it has been verified before.
And up to now, more than 60 million knowledge assets have been minted so far. And just to be a bit more specific about Norweb per se,
it is a parachain, but not just anyone. Because in the last 365 days, more than 140 million
transactions took place on Norweb in its best month, that was November 2024. Norweb actually
made up 77% of all parachain activity. And even in March 2025, or April 2025, actually,
Norweb still processes 3,000 to 500,000 transactions a day.
But why should you pay attention to this?
Because verifiable knowledge matters in so many sectors,
whether it's decentralized science, AI-driven fintech,
secure data sharing, or even transparent supply chain tracking.
To look at one practical example that's already live, that is the PolkaBot, PolkaBot AI,
which is an AI-powered chatbot that answers all of your PolkaBot-related questions
and exclusively is using NeuroWeb's decentralized knowledge base to do so.
And you can try that chatbot yourself
by visiting polka.ai.
I think it's pretty cool to see how Norweb is bringing
knowledge on chain on Polkadot.
And thanks to Polkadot for partnering with us
for our weekly explorations.
I like it.
I like the integration with the AI stuff in particular today.
Funky, your hands raised, resident Polkadot expert,
amongst other titles what
what are your thoughts there no just i was gonna say neuroub is really cool and that bot is awesome
uh what surprises me however is ever since they did the post tge kaito yapper board leaderboard
thing on kaito or whatever so many people who know nothing about polka dot just
keep talking about this stuff from like three years ago that doesn't even exist or we've moved
on from whatever and I'm thinking like you could just go to this bot or even the website and find
out better information but yeah great job of covering neuroweb this it's really impressive
what that change they're doing yeah that's uh that's a good tip. All that Kaito stuff's been pretty interesting. That's probably
something to reflect on for another time. But the fact that you've got all these rewards now
has definitely changed the dynamic and people's perception of Kaito. Now that it's all so much
more formalized, I think it's kind of turned into something which, well, I think it's basically turned
unpaid accounts into paid accounts when it becomes kind of obvious that you're kind of
doing it in order to receive a reward.
And I think creators just more generally before we get into the tarot stuff need to really
think about the proportion of which your posts are chasing rewards versus the amount of posts which are,
you know, just genuine, authentic, normal posts. I think that's wise to keep in mind as you are
going on your creator journey. Quick digression there, but look, we wanted to get into the main
headline now, probably spend the rest of the show on this, to be honest. Ledge, I gave you no
guidance today on what to go for when it comes to the tariff news yesterday.
What do we need to know?
What are your thoughts and what are the implications?
Absolutely.
Yesterday, President Donald Trump proclaimed April 2nd as Liberation Day and did unveil a series of unprecedented massive, massive tariffs that sent the stock markets and cryptocurrencies into a bit of a tailspin, to be honest.
The new policy is imposing a universal 10% tariff on all imports, effective April 5th, with substantially higher reciprocal tariffs targeting specific nations.
China faces a total tariff rate of 54%, European Union and Japan are subject to tariffs
of 20% and 24% respectively. And these increased rates are scheduled to be effective from April 9.
So what did the administration do to come up with those numbers? And there's been an article in the
Financial Times that said there is some method to this madness
because they call them quote-unquote reciprocal tariffs which would imply that this is exactly
the tariff that the other country for example Switzerland or Vietnam had imposed on the US but
that is not the case they came up with a specific formula which the Financial Times had reported on. So first step is you assess the trade deficit.
Basically, you determine the U.S. goods trade deficit with a particular country.
That means, is that country exporting more to the U.S.?
Is it importing more from the U.S.?
And the trade deficit exists from the U.S.'s perspective.
If there's more exports happening from the other
country, then the US are exporting to that specific country. Then you divide the trade
deficit by the total of US imports from that country and obtain a percentage. You have this
percentage to set the tariff rate. If we look at an example for that, for example, Bangladesh,
If we look at an example for that, for example, Bangladesh, US imported $8.4 billion of goods
from Bangladesh in 2024, giving it a 6.2 billion trade deficit in the country.
That is 6.2 divided by 8.4.
And that is 74% divided by half.
And you come up with the tariffs that have been charged for this particular country. And this very abrupt nature of this announcement,
plus the intensity of the tariffs,
has led to significant, significant volatility in global markets.
In Asia, Japan's Nikkei 125 index is down 3%.
Hong Kong index down 1.5%.
European markets, in particularly Germany,
the ducks have declined as well, 1.4% for the German
markets, UK FTSC down another percent, S&P 500, Nasdaq 100 fell over 4%. So and obviously
cryptocurrencies, Bitcoin, ETH, etc are down as well as we had reported on that. The key takeaway
before I get into some additional data is the tariffs have
exceeded all expectations. JP Morgan's Michael Ferroli said that based on some standard
calculations that they have been running, the US could generate nearly $400 billion in taxes
that would make it the most significant tax increase relative to GDP since the 1969 Revenue Act.
And looking at inflation numbers, they project that these tariff measures could elevate inflation by another 1 to 1.5%
and basically raise the average effective tariff rate
from a global perspective to 23%,
which would be the highest level in the last century.
That is it on a headline level.
I have some additional bits and pieces to get into,
because as you said at the start of the show,
depending on the industry, you said BTC has been ranging for a while,
but for some industries, this is really, really significant.
And I want to take a look at nike because uh wall street obviously
both companies investors there have been reacting strongly to that and for nike specifically they
said the stock is uninvestable now because um like many apparel brands sportswear brands shoe
manufacturers they do manufacture in countries like vietnam in China, etc, etc, which have some of the highest tariff
rates from that. And for that reason, the analysts went as far to say that those companies right now
are uninvestable, there's no sensible way to buy this stock right now. And the market has been
reacting to that quite, quite strong, strongly. Taking a look at nike that is down 9.5 almost 10 percent
on the pre-market so it's not only the case that the overall stock market is down that crypto is
down it's also the case that you have industries that are very very very strongly um affected by
that and also like from that financial times, which has reported on quite some good
data, they went as far to say, they renamed it, it's not
Liberation Day, it's Libation Day, because after those
announcements, you really need a drink to process what is going
Okay, fantastic summary. As you said, there's a lot of stuff to digest there, and it's not going to be straightforward to do that. I think we'll probably need some more time. A couple of quick ones for me. I'm going to come back to you with a question and we'd love to get Stats' thoughts in a second as well. He's just joined us, so I'd be very, very curious to hear his general reflections too.
He's just joined us, so I'd be very, very curious to hear his general reflections too.
One thing we were talking about was the importance of the information, right?
So the headline numbers that were being given for these tariffs, from my understanding,
based on what you just shared in the conversation we had before the show, is that they're basically
just wrong. The percentage tariff that is supposedly being levied against the state
is actually something that is calculated to do with the surplus that they're running.
Is that fair? Do you want to just explain from your understanding what you are taking away there
and what people should get a sense of where these numbers are coming from, what's right and what's wrong?
Yeah, I think from Donald Trump's perspective, he's looking at the trade balance and he's saying
what is fair if the US is exporting the same value of goods to Germany,
then Germany is exporting to the US. If there's an imbalance,
and if there's a trade deficit, that is not fair. And that is basically what has been happening
around the world, because the US is importing so many things, so many goods and services.
And this is the calculation basis that has been used for a tariff. So it's not saying
they have a 20% tariff against us
so we're just going to do the same.
It's saying the fairness lies in the balanced trade,
well, in the trade balance being at zero
and no deficit, no surplus.
And if that is not the case,
if there is a deficit, this is unfair
and this is the basis for the calculation of how high those tariffs should be in President Donald Trump's opinion.
Got it.
Two initial thoughts on that then is that it's almost impossible for other people to balance that in a sense because they don't have the market that the US has.
So obviously there'll be more things going towards
the states because it's the bigger market i would have thought um yeah that's like the feature of a
global economy like take a look at a small country like austria we are um exporting a huge amount and
so is the entire european union of semaglutide which is is Ozempic, basically. And the US is a massive, massive buyer
of Ozempic. And Austria is exporting a lot of Ozempic to the States as well. And we are importing
some things from the US, but we don't need to import everything from the US because we're
importing from other countries as well. And that is kind of the idea of globalization, that you have
a market where everyone can trade with one another.
And it's not a bilateral relationship where I give you $1 billion of goods and services and vice versa, import the same amount from you.
This is how Donald Trump wants to look at it.
Okay, so I think that was a helpful thing to clarify.
The second thing I was going to say,
and we don't know, we haven't had the time to research this deeply, but a couple of things could be true, right? It could be true that, okay, the way that they've calculated it is from the
surplus, but they could also have had a tariff as well. And it's definitely true that there are
a number of countries who tariff the states more than maybe the states
don't tariff them at all or they definitely do have tariffs and you know i i just think just
some people were suggesting that okay the numbers are terrible they're all wrong that's how it's
all been done it's like okay but there could also be tariffs in addition to that um so there's just
like i just want to counterbalance that quickly um did you say you
wanted to go in another direction or i think we'll let's go to stats first to get his reaction
stats welcome to stage again with us good to have you back how are you how are you making sense of
what was going on yesterday you know i'm no expert on this stuff. My sense is that the, look, I think there was always this doubt that Trump was really going to be so wedded to these tariffs. And the, my, at least when I went into this administration from a kind of just like how I was, where I was putting my money perspective, at least in the first term, I always thought that Trump prioritized stock markets and asset markets.
And I thought that was one of the main scoreboards he used.
And I think that what we've seen in the stock market in the in the corrections since his inauguration is people is the market starting to digest that.
That's just not true anymore. And one thing that's very, very clear is that this market does not like tariffs.
clear is that this market does not like tariffs. Now, you know, I, I don't even think, I don't
really understand the five-year case for this because a lot of like the J.D. Vance theory of
things is that, you know, slowly or even quickly manufacturing is going to come back to the States
and we're going to derail NAFTA. But the only reason, I mean, NAFTA is one example, but we're
going to derail all this kind of Nike makes their shoes in Vietnam. They're going to start making
them in America. But if you're Nike, when you look at the way that trump has treated these canada tariffs for example
which is kind of in just two months gone up and down multiple times you don't i mean to build to
move all your manufacturing here you have to have faith that this is like a five to ten year
commitment and say he hasn't even been consistent on the way he's treated Canada over the past two months.
I think there's too much.
He's too fickle about these in the past for a CEO really to do the big picture things that he's asked for.
And furthermore, you know, when it's all done by executive order, it can all get unwound by whoever the next president is, you know.
So I don't know.
I think the big picture goals
don't make a whole lot of sense to me but i think it's clear right now that stock markets aren't his
priority and that is a huge difference from the way the market viewed him just two months ago
and you know who knows what will happen who knows if he'll you know he feels like he's getting
deeper and deeper entrenched into this. But I don't know.
And I think that's kind of what you're seeing in the price action.
It's just people being like, whoa, this is actually not.
We know he talked about this, but I think there was just, you know,
the all-in guys always say take him seriously but not literally.
And here, you know, the strategy was just to take him very literally,
which I think was a surprise.
And this is exactly the problem, right?
Stats, you said perfectly.
You don't know how sustainable this is going to be.
So nobody, no company in their right mind is going to be like, let's change our
entire supply chain in the US because we just don't know how long this is going
to be a thing.
And that then leads to basically stagflation where there is, well, growth is
stagnant, but at the same time, inflation is increasing because you are raising tariffs,
which again, as we said,
should lead to like 1 to 1.5% additional inflation,
according to JP Morgan's math on that.
And then the other thing really is,
if you ask yourself the question,
what it means for the strength of the dollar,
typically, like in macroeconomics, you would say imposing tariffs,
making imports more expensive, improving trade balance,
should lead to a stronger dollar.
But what a lot of experts have also been saying is that this entire math
and those models have never been done with tariffs
at that scale because there's like so many more effects coming into place as market uncertainty
obviously being one of them that the retaliatory measures that can be taken exactly this company
sentiment of not knowing how sustainable this is and will we adapt supply chains for that
led to the point where a lot of people have been saying
it's impossible at this point to determine
if this is going to weaken or strengthen the dollar.
Because again, in theory, simple tariffs should lead to a stronger dollar.
But because this is at an unprecedented scale,
it has become impossible to say what's going to happen.
I feel like this caution needs to be applied with all of the math that we are seeing around
that.
So that's some ecstatic calculations that, again, JP Morgan did.
But what they cannot factor in is how other countries are going to react to that stuff
and how that will affect inflation again.
Konstantin? Oh, I didn't really. affect inflation again. Go on, Stutz.
Oh, I didn't really.
Carry on, carry on.
Okay, I thought he came off mute.
I thought he wanted to continue.
One thing on that before maybe we consider some of the further consequences.
I think you mentioned supply chains. The allegedly Balaji had this
tweet, which was on top of where he shared this point where he said, this is nuking every single supply chain that passes through the US in any way. And this ties into the point that Sam is making,
which is like the timeframe. Like if you were a leader of one of these companies,
what are you supposed to do today? What are supposed to do tomorrow you can't actually take action on any of the stuff because
everything's been so fleeting that any decision that you take would be potentially changed by
next week and these are like decade-long decisions that they're asking people to take and so Balaji's
point was on you know this is going to nuke every single supply chain that passes through the US in any way under the illusion that 45 years of deindustrialization can be fixed in one day of 45% tariffs.
In his opinion, he said countless low margin businesses, including US exporters, will be pushed into unprofitability.
But I think that point on timing is something which makes sense to me, because how would you reasonably or foreseeably make a concrete decision about the next decade when everything has been so hyper-volatile for so long?
I think you'd be very hard-pressed to make a meaningful decision in the next few days, right?
But legendary, you spoke about reactions to this.
You spoke about other countries, what they might be up to.
Obviously no one knows, and we don't have a good sense of what people are going to do.
Um, in any of your reading, what was your kind of sense of how different people are reacting?
What are your thoughts in that direction?
I think to answer that question, let me bring up a chart first,
just to get a feeling of how big this increase is.
So what I'm sharing on the screen is the average tariff rates
on U.S. imports over the last century.
And as I said, like this
is a century all time high for the effective tariff rate, like 22 23%. And in this chart,
you can see how it's been declining over the last 100 years, with the exception being the
time before the Second World War, it has been going down and down and down.
In 2024, we had an effective tariff rate of 2.4%,
and that basically 10x'd with this one Liberation Day announcement.
So this is how massive this has been.
And for that reason, the answer, at least what I can read,
say from the European side side is that before that there's
been a lot of like discussions how the u is going to react to that and what they're going to do in
a lot of planning but now seeing how basically extreme all of that is there is no clear answer
yet i think china has been a bit stronger in its response, saying that they are, well, they are both ready to talk,
but also ready to have retaliatory tariffs going on.
But the EU, for example,
does not have a good answer to this right now.
I feel like a lot of countries, including Germany,
who's been hit definitely harder
as a country that is exporting a lot to the States,
is doing the math on
what it means for their basically deficits and then how it will affect their economy.
But also because there is a series of exceptions to that.
And I had mentioned Ozempic before, which is something that we're exporting to the tune
of billions of dollars to the us that was
a bad example because there is an exception for pharmaceutical products for medicine there is
also exceptions for certain services so because you have this massive terrorist but you also have
exceptions for them and they're at such a large scale i don't see a clear response from many
countries at this point in time.
And I think it will take a bit to have this response.
Okay.
I think that's fair.
I mean, ultimately we just have to see how, how people respond as we draw towards the
end of the show, got like five minutes left, probably go in two directions here.
Stats, did you want to come in first?
I was just saying what Legendary is talking about
is part of the problem.
It's that you have these exceptions
both for countries and for companies and for products.
And ultimately, it just has to make you bullish
on the administration's power
and the potential for corruption
because everyone now is going to be wanting that meeting
where they can try to get their exception.
Where they can try to get their exemption.
And maybe that's's bullish Trump coin. Maybe that's the avenue of corruption
that happens here. The market's not saying that
because Trump coin's down 13%.
There are all sorts of different ways to try to figure out
who this benefits and what this benefits.
But I think that the amount of corruption we're about to see as people try to do favors to get their exceptions, to get their exemptions, you know, it could be out of control.
And maybe it won't be.
I mean, maybe that's maybe this has nothing to do with that.
But I think that when you start seeing that, it literally just becomes one person or one administration deciding who gets
benefits and who doesn't and and it's in such a massive massive way because it is the entire
american consumer base that is that is the lever here so i don't know it's a little uh yeah we'll
see what happens no i mean it's a fair point um and. I think that cloud has kind of hovered over this administration, frankly,
especially as it relates to the various crypto activities
that they've decided to participate in
whilst passing the very pro-crypto regulation.
So I think it's a fair question to ask.
In terms of two directions, I want to take it in the last couple of minutes.
I might run over just a little bit. In terms of who it's supposed to take it in the last couple minutes might run over just
a little bit in terms of who it's supposed to benefit this is my kind of open question i don't
know the answer to this question but to the extent that you know it's supposed this stuff is supposed
to benefit the american working people and i know that i've even had some comments already on some
of my tweets from earlier saying none of this is helping anyone. This is all going to be bad. It's like, okay, I can, that's a criticism of the policy. I can see that.
But I guess the question is to the extent that all the stuff that was going on before the policies,
which had led to, I don't know, all time high stock prices, unaffordable property, all time high consumer debt,
all time high student debt, all of these things that have
been happening at the same time, and people's purchasing power just getting absolutely wrecked
in general. And this is like a, I don't know whether it's a two decade old trend, a one decade
trend, or just that something's been trending towards in any way. The debt was and is spiraling
out of control. There's is something different it is definitely
something different and so the question is is there any merit to trying to pursue something
which is different in order to try to address some of those things you might disagree with
the execution and question some of the motives in different ways and maybe certain things open open open
the door for potential corruption potentially but is there any merit in trying something else in this
way because what was going on was not sustainable the debt was going out of control and this might
be a way to uh tackle it um starts i think you came off mute. Open question there.
We'll be curious for Legendary's thoughts too in a second.
Yeah, I mean, look, Bessent talks about this.
They talk about how the ERS, the External Revenue Service,
is going to replace the IRS.
I think Trump really believes in this stuff.
He talks about how every time asked,
he talks about the economy is going to be so strong
and people won't know what to do. If you're trying to be as generous as humanly possible, if
you assume that all economic activity continues as it always did and there's no change, but
now we're just taking 25% of every transaction, then yeah, that's a lot of revenue. I don't
understand this idea that it replaces taxes because we have such a huge debt to pay off that you would presumably think that any extra money would go towards that as opposed towards making it so taxes go down too much.
But I think that's the extremely generous case that he's trying to push.
And I actually think there's a decent chance he believes it.
Again, I'm not, I don't think that it's, sorry, my eight-year-old just jumped in.
It's not my base case at all, but I'm trying to be generous and understand the motivation here.
I think that's certainly one of the paths.
Interesting. Legendary, what do you think?
Yeah, I agree with stats that this is probably the thinking.
Looking at the numbers from what we can tell so far, what we know for sure is the US debt, 36 trillion.
We've seen those projections, which could say this adds 400 billion in tariff revenue to the US.
So there's like still a massive, massive discrepancy to close this gap.
to close this gap.
And Kusho in the comments has been asking
if certain industries or specific types of goods
and services are exempt from tariffs.
There is somewhat of an answer to that.
So the answer right now is the White House has specified
that there is exemptions for semiconductors
because obviously you need them
and that there's always a supply shortage for them.
Pharmaceuticals, copper, lumber, specific energy resources, all of those are not subject to tariffs.
But what they also have said is, and that is exactly playing into the uncertainty that
Stats had mentioned before, is that this might change in the future. So semiconductors are
currently exempt, but they have also indicated
that there's potentially going to be tariffs
for those categories at a later time as well.
So we know there's currently exemptions,
but how sustainable they are, no clue.
Okay, I like it.
Interesting stuff.
Final question.
I think as it relates to crypto, let's kind of tie it back as we close the show today. We don't have much longer. In fact, we've already run over, but trying to tie this back to crypto in some meaningful way stats. same message about how bitcoin is performing in this type of market when stocks are also down
and gold is up wanted to give you a chance to share your thoughts here um how all of this stuff
is affecting crypto how crypto is responding uh in particular and then signal is up with us as
well i want to throw to her in a moment yeah maybe uh i'll make it quick so signal can jump in but
Yeah, maybe. I'll make it quick so Signal can jump in. I mean, Bitcoin is still doing well, relatively speaking. I mean, Bitcoin at $82,000, I think, is still a pretty good result. I think there's still a feeling that – I mean, maybe there's a chance that Bitcoin is just becoming a total chaos hedge.
It's not trading like that at all.
It trades absolutely nothing like gold whatsoever,
which I think has truly traded as a cash hedge for a couple decades.
One thing I pointed out is that Bitcoin trades more like Tesla
than it trades like Nasdaq.
It trades more like Tesla than it trades like S&P 500.
And my read there is I think that it is like both Bitcoin and Tesla
are kind of treated right now as proxies for assets
the government will do favors for. And I think that's very real. it is like both bitcoin and tesla are kind of treated right now as proxies for assets the
government will do favors for um and i think that's very real i think there is just a sentiment
that this is like that bitcoin's one of trump and his family's favorite assets so it's like in this
craziness you don't really want to bet against it like stocks which are much more earnings driven
and earnings are perhaps what's at risk here. But yeah, I think through it all,
Bitcoin has traded better than a lot of stuff
in this kind of chaotic moment,
either because people see it perhaps a bit more
as a chaos hedge or more likely,
I think it's just very clear that it's something
that the Trump family really wants to support.
I mean, everything else is a piece
yeah i just wanted to just want to tee you up for that uh the that that particular comparison i think you've you've been kind of repeating yourself over and over with the with the gold
comparison in particular so i thought that's kind of helpful to just bring to people's
what are you talking about repeating yourself over and over?
Two tweets.
No, I feel like this is like a multi-cycle thing.
I'm talking about like multi-cycle.
You've kind of made that point, I think.
Yeah, not really.
Not really.
Maybe because we chat about it in the WhatsApp group a little bit.
Oh, yeah.
Okay.
I'm just bringing the private conversation into the show.
That's fine.
We do that sometimes.
Signal, welcome to the stage. Hope you are well. What's going on here? What are you thinking? How do you want to
comment on this Liberation Day? Yeah, good morning on Liberation Day. So I actually see these
tariffs as being positive, depending on how monetary and fiscal policy is utilised by central governments.
But I think one of the things that people are kind of missing is that the US was incredibly isolationist for many, many, many years.
And incredibly wealthy from that simply because, well, they never got involved in World War II.
Therefore, their economy and their
people never took, you know, such a hit. But like going back decades ago, manufacturing used to be
in our domestic countries. Like I have clothes from going back to saying made in England. And
I'm sure many of you have clothes if you look back to the sort of the vintage stuff that says
made in your country. And it wasn't until we basically took a more like globalization
a more global view so like late 90s early 2000s where companies started to outsource their
manufacturing to Asia because labor is cheaper that everything got very cheap that's why Primark
H&M Zara and all these brands exist and by forcing the offshore activity to come back onshore, essentially, you're bringing jobs back to the economy.
You're making countries think about where they want to position new startups.
So now if you go to the US, that looks very interesting because you are exempt from certain interest rates.
I think what Trump is essentially trying to do is just bring the, you know, make America wealthy what it was 40 years ago.
But in order to do that, like Bicek, what you're saying, he has to take such drastic measures.
And I don't think the previous administration would have ever done that.
Now, you know, going back to what I said, I don't know if tariffs will be positive in the end because it depends what monetary and fiscal policies are implemented.
depends what monetary and fiscal policies are implemented. But I think the idea of actually
trying to put production and jobs and sourcing back into the United States is actually a positive
thing. Many countries are essentially too chickenhead to do it because it's so controversial
that you need a controversial leader. And at the moment, at least in Europe, there aren't too many
of those figures. But if
Trump makes this work, in the next four years, what you will see are much more controversial
figures heading EU countries. My only concern is this. If he does that and it brings inflation to
the US, how will the US worker actually afford this? Because it might cost $2 to make jeans in
Mexico, but you need to pay that same worker $26 in the US,
and that is inflationary.
So that could lead to obviously many avenues such as,
you know, robotics, AI, et cetera.
But there will be many ramifications to these tariffs,
but we won't see this play out for the next four years.
I appreciate the take.
That's kind of why I was asking the question,
like, what is the merit in it then?
I think a lot of people are enjoying dunking on the attempt, but they would let fewer people dunking.
Well, maybe some people would do this when they're able to reflect, but there was no specific moment where everyone came out to dunk on the endless set of policies,
to dunk on the endless set of policies, which to be fair, it's ongoing, multiple years,
both sides of the aisle, pursuing this policy that has got the states, and frankly, everyone
else is kind of doing the same thing, into this insurmountable amount of debt. And everyone was
kind of just going along with it. And so's why i wanted someone to i don't know just articulate the other side as best we can one thing i would comment on maybe
legendary and i'll come to you to to close out as you've gone over but i thought it was important
to go over today is i completely agree again a lot of people are analyzing stuff in isolation
just like if you analyze this um these tariffs just on the tariffs this is my conclusion one of the things and again i don't
know if this is the right thing but they when you when you listen to them talk at length i can't
remember if it was besan or lupnik they said we want to have the tariffs and we want to pair this
with lower taxes in general um i heard that number being floated around. It's like if you earn less than 150K, you'll have like no taxes, no taxes at all.
Look, I don't know if that's the right number.
I haven't run the maths, but the point is there should be things that are dovetailing
with this headline policy, which are hopefully going to make things make a bit more sense
or soften the blow that they are going to impose with the terrorists.
They're not entirely stupid people, I think. Some of the people behind this are intelligent and
know that there's going to be a hit. I think that's, you know, part of this game is that
they know that there's going to be a hit. And so they're going to have to work creatively in other
ways to figure it out. And so, yes, I think that point is correct.
What are the other policies that are going to pair with this to try to deal with the fallout and the negative stuff that will come with it?
So I appreciate that thought.
Legendary, maybe come to you just to close this off now.
Any final reflections based on anything Stats or or signal said which were pretty awesome contributions yeah i think when i want to take a final point from balaji who also said that they're
restoring a single parameter to the 20th century levels in the hope to restore the 20th century
and then my my thought on that is a lot of country used to be very isolationist but the world was
also very very different there was not the need for all
those things that we have today you have semiconductors yeah electronics basically you
have so many things that you use in your daily life that's impossible for a single country or
almost impossible for a single country to build all of them maybe China can pull that off or maybe
a country like India could pull that off but it's's extremely hard to do. And I think this is also the reason why we're seeing those exceptions for copper,
for semiconductors, for pharmaceuticals and some other things. That is kind of reflection on the
fact that you can't truly be isolationist. But I also feel like this is completely understating
the complexity of supply chains, because just having an exemption on semiconductors is not
going to solve for the fact that
wherever those semiconductors are being produced
whether that's an Austrian company who's manufacturing
a lot of them, a German one
as well, or a lot of them coming from China
there is complexities in their economies
and supply chains as well
and tariffs that
might have an exemption for
the tariff exemptions that might exist for semiconductors are not going to solve for the semiconductor imports because you will have a local economy around that company that is producing those semiconductors.
And I don't know, they might have some other economic aspects that are very specific to them, some other exports that are happening, which are heavily then impacted by the tariffs.
And then again, the intention is to say,
yes, we can't be completely isolationist
because we need those things.
But by still having flat tariffs on everything else,
you basically are kind of understating
the complexity of a supply chain.
We're just saying, if I have the exception for the one thing that I import,
there's not going to be any secondary effects of the other
that tariffs that have imposed on everything else.
Good stuff.
Excellent final thought.
Look, as we've said before, this is frankly above all of our pay grades.
We're doing our best to summarize, synthesize,
evaluate the information that we have available
with the um intelligence that we have available to us which is maybe limited when it comes to
these specific topics but we hope that was a helpful conversation on on tariffs and what we
can make of the situation based on the limited information we have um reminder we do this every
single day monday to friday at 7 00 a.m eastern time for one hour we're live on x x video apple and spotify podcast too hope you found that interesting
thanks to legendary for co-hosting and stats signal and funky up on stage with their awesome
contributions as usual we will be back again with you tomorrow i'm sure we will have more to discuss
have a wonderful day take care and we'll see you tomorrow bye
