Money Rehab with Nicole Lapin
It's Not a Trade War— It's a Yield War. Here's Why That Matters
Thu, 10 Apr 2025
We are all feeling the market whiplash— today, Nicole explains why that whiplash is happening, and the possibility that the stock market crash was not collateral damage, but the point all along.
Chapter 1: Why are everyday goods becoming more expensive?
So I just went to the grocery store and I actually flinched at the cost of eggs. And I don't even really eat eggs. That's how bad it is. Everything feels more expensive. And so I'm hearing from a lot of money rehabbers right now that their credit cards are getting a lot of exercise right now. But the last thing I want for any of you is to go into credit card debt. Enter Chime Credit Builder Card.
Chapter 2: What is the Chime Credit Builder Card and how can it help build credit?
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Go to Chime.com slash disclosures for details. So I have written, count them, five books now. But each time I'm in the writing process, I stay at an Airbnb. I love to stay at an Airbnb. When I was actually first launching this show, I was at an Airbnb in Arizona. It was so peaceful. It was stunning. I could be productive and comfortable. The Airbnb was also surrounded by a ton of javelinas.
If you know Arizona, you know they're like wild pig creatures. But honestly, I love them too. Being away for work, for fun, or both is a perfect opportunity to host your space on Airbnb. And if you think that hosting is overwhelming, I have a solve for you. With Airbnb's co-host network, it's easier than ever before to host. It's also a great way to earn some extra cash, which I know we all love.
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Chapter 3: How can Airbnb's co-host network assist hosts?
Now you can hire a quality local co-host to take care of your home and your guests. They can do everything from creating your listing to managing reservations to messaging guests and even providing on-site support. So if you've got a secondary property or an extended trip coming up and you need a little help hosting while you're away, you can hire a co-host to do the work for you.
Find a co-host at Airbnb.com slash host. I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. So a couple of years ago, I got into a really bad car accident. I was rear-ended, my car was totaled, and the whiplash I experienced then is only second to the whiplash I experienced in the markets this week.
10%.
2,200.
8%.
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Chapter 4: What caused recent market fluctuations and the false rally?
That is how much the S&P 500 came back yesterday and nearly 2,500. That is the number of points the Dow jumped yesterday. On Monday, I did an episode about why the markets dropped and wow, I cannot believe that episode just came out on Monday because it feels like 100,000 years ago. But anyway, we already did that. So let's talk about why it rallied yesterday.
It actually starts with a false rally that happened a few days earlier. On Monday, a tweet caused the market to add back trillions of dollars in value. The problem was the tweet had completely wrong information. A regular guy, Walter Bloomberg, the name is just a weird coincidence. He has no affiliation to the other Bloomberg.
Chapter 5: Did a tweet really cause the market to rally?
tweeted that Kevin Hassett, President Trump's director of the National Economic Council, said that Trump was considering a 90-day pause on his controversial tariff proposal. So, Walter said that Kevin said that Trump said that he was considering a 90-day pause on tariffs. But, He wasn't at the time. The origin of the tweet is even more of a he said, he said.
When we go deeper into this rabbit hole, the real origin of this mixup was a tweet that Bill Ackman, famed hedge fund manager investor, posted on Sunday. The tweet was very long, but the highlights were, quote, The president has an opportunity to call a 90-day timeout, negotiate and resolve unfair asymmetric tariff deals and induce trillions of dollars of new investment in our country.
And the president has an opportunity on Monday to call a timeout and have the time to execute on fixing an unfair tariff system. Alternatively, we are headed for a self-induced economic nuclear winter and we should start hunkering down." Then on Fox News, Kevin Hassett was asked about whether Trump will do a 90-day pause in response to Bill Ackman's plea.
And Hassett said, quote, you know, I think the president is going to decide what the president is going to decide. But then he went on to talk about how effective the tariffs were. So not a no, but certainly not a statement about any semblance of a plan to pause tariffs.
And then on Monday, CNBC aired on TV in a banner that read, Hassett says Trump is considering a 90-day pause in tariffs for all countries except China, which was totally misconstrued from the Fox interview. And the CNBC reporters on air quickly corrected it. But then it was too late. Reuters picked it up, which was what then caused Walter Bloomberg, not that Bloomberg, to tweet.
So the full story is Walter Bloomberg said that Reuters said that CNBC said that Kevin Hassett said that Trump said he was considering a 90 day pause on tariffs because of what Kevin Hassett said about what Bill Ackman said. Are we following? It was basically a crazy, crazy game of telephone. And the White House channels started sharing Walter Bloomberg's tweet and denied it right away.
But at that point, it was too late. The market had rallied 10 percent on the tweet. So imagine the market's surprise when just two days later, Trump did announce a 90 day pause on all reciprocal tariffs. except for China, which got slapped with more tariffs. The grand total, by the way, for China is now 125 percent. So net net reciprocal tariffs still apply to Chinese goods.
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Chapter 6: What was the outcome of the tariff pause announcement?
But for all other countries, only a 10 percent universal rate applies. not the additional tariffs based on that complicated-looking tariff formula that Trump whipped up on Liberation Day. And I said imagine the market surprised, but I mean, I am not surprised at all.
I said last week when I talked to James Altucher that at some point, Trump, I thought, would say, psych, this has all been a big bargaining chip. That's not exactly what the president said when he made the announcement. What he actually said was that he did this because people were getting, quote, yippee. In response, the market rallied big time, this time because of real news.
So what happens next? This is a relief rally. Investors are relieved that a vast majority of tariffs are being walked back. But when the dust of this announcement settles, China still is a really important manufacturing and trading partner. And so with these tariffs, it's hard to imagine a scenario where we can just jump back into a bull market.
It kind of reminds me of this thing I've seen kids do when they have bad news to tell their parents, say they broke a lamp or something. And so they make up a worse story to tell their parents, like, sorry, mom and dad, the dog ran away. Just kidding. Good news is the dog is totally fine, but the bad news is I did break a lamp.
The knee-jerk reaction is relief that the news isn't that bad, but the parents still get to be mad about the thing that went wrong. I think this latest news on tariffs will be kind of like that. We're enjoying our moment of relief that tariffs are not that far-reaching.
But once we take a deep breath and settle into what remains, the market will go back to throwing a tantrum about the tariffs on Chinese goods. So why keep the tariffs at all? Everyone thinks Trump's new tariffs are about punishing China or reviving American manufacturing and that the stock market is just collateral damage. But that's not the entire story.
The collateral damage might be, in fact, the whole point. Here's the deal. As you know, the United States has a giant debt problem. As I'm recording this, the national debt is $36.2 trillion. And even though I'm publishing this episode tomorrow, really just three hours from now, the debt will still be higher by the time you listen to this.
Over the course of the next year, the US has to refinance nearly $9 trillion of debt. Reason being, outstanding treasuries are maturing, so they need to be rolled over to a new rate. When a lot of these treasuries were issued, interest rates were close to zero. Today, the 10-year treasury yield is over 4%, and every single basis point adds billions in interest.
Because remember, for us, treasuries are an investment. But for the government, treasuries are loans and therefore part of the national debt. So if yields on treasuries went down, that would benefit the government and curb the debt. This is critical. Famed investor Ray Dalio says that if yields don't go down, we could have a sovereign debt crisis like Greece in 2008. We all remember this.
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