Stephanie Pomboy: Tariffs Are Just The Trigger, Not The Root Cause Of The Market Sell-Off

They aren't the only big challenge we have to worry about

Since last week’s “Liberation Day” stocks have tanked and US Treasury yields are back on the rise.

And suddenly everyone expects a recession lies ahead.

Will the sell-off get even worse from here?

Macro analyst Stephanie Pomboy returns for her bi-weekly live session to discuss the odds with me.

We discuss the near-term fallout from the trade war escalation Trump has unleashed, how it’s likely to resolve, what the long term objective is of the new Administration, and why regular consumers/investors should seek ways to avoid becoming collateral damage of the sea changes afoot.

For Stephanie’s latest macro & market update, click here or on the video below:

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Adam’s Notes: Stephanie Pomboy (recorded 4.8.25)

EXECUTIVE SUMMARY:

• Liberation Day Tariffs as Negotiation: Stephanie Pomboy views Trump’s Liberation Day tariffs as a negotiating tactic to secure fair trade and re-shore US manufacturing (e.g., pharmaceuticals), not a shift to a tariff-based economy, though she notes volatile market reactions reflect uncertainty over this strategy’s endgame.

• Treasury Market Sea Change: Stephanie highlights a seismic shift from globalization’s quid pro quo—US consumption funded by foreign Treasury purchases—warning that reduced trade deficits could spike yields (e.g., 10-year to 5%) as foreign buyers retreat, with US Treasury Secretary Scott Bessent’s bank deregulation plan a shaky substitute.

• Recession Probability Rising: She sees a recession as already underway for consumers and manufacturing, worsened by tariffs’ financial fallout—stock volatility, rising yields (junk at 8.63%), and widening credit spreads. Jamie Dimon also said this morning that he sees a recession as likely this year.

• Basis Trade Blowup Risk: Stephanie flags the unwinding Treasury basis trade (20:1 leverage) as a potential crisis akin to