If one was following the price action of stocks today in response to Trump’s Thursday announcement of steel and aluminum import tariffs, one would be left with the impression that either the market thinks Trumps is bluffing, or that tariffs are bullish for risk assets. As shown in the chart below, both the S&P and the Nasdaq closed at session highs, with the Dow just barely red, while the tech index was effectively unchanged from yesterday’s announcement level.

Well, considering that Trump not only doubled-down, but tripled-down  on his tariff threats, it does not seem realistic that the president will flip-flop on this issue, even if it means that Trump’s precious stock market (big, fat bubble) lets out some air.

Which then leaves open the question of whether tariffs are – somehow – bullish. And just to dispel any confusion on the topic, this afternoon GMO’s Ben Inker wrote something so simple, even a momentum-chasing algo will understand it:

As a general rule, when you add “war” to your description of an event, it’s a pretty strong suggestion that it is unlikely to be either good or easy. Wars are sometimes well intentioned (the war on drugs), occasionally necessary (World War II), but seldom good and more or less never easy to win.

The last of course is a reference to Trump’s tweeted prediction that “trade wars are good, and easy to win” to which Inker responds that “even if you do “win” easily, the longer term implications are often more problematic than you thought (the second Iraq War). There is still some time for this particular war to be averted. But while it is our general contention that equity markets tend to overreact to political and economic events, this is not one of those times.”

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