| A GREY SWAN PUBLICATION | Monday April 7, 2025 | Swan Dive — April 7, 2025 The Day the Circuit Breakers Tripped From the desk of Addison Wiggin
If you've ever watched a controlled demolition — a flash of explosives, then a building collapsing into its own footprint — you've seen what happened in Japan this morning.
At 8:45 a.m. Tokyo time, the Nikkei 225 plunged over 8%, triggering circuit breakers and halting futures trading for 10 minutes. Spot trading on the Tokyo Stock Exchange remained open, but the damage was done. 📉 Nikkei Nosedives, Global Markets Follow By day's end, the Nikkei was down 7.8%, its worst performance since 2020. The Topix fell 6.5%. European markets didn't fare any better; the DAX dropped 9.4%, and the FTSE hit a 12-month low. Stateside, Dow futures are down over 1,300 points, Nasdaq futures nearly 5%, and the S&P 500 is tumbling. Investors worldwide are heading for the exits like someone yelled "fire" in ten languages. 💥 Ackman Warns of "Self-Imposed Nuclear Winter" Bill Ackman, typically a Trump supporter with a flair for financial theatrics, offered a sobering assessment. He described the current selloff as a "self-imposed nuclear winter," cautioning that America's aggressive tariff strategy might be undermining its own economic foundation.
We like Ackman. We followed his lead in October of 2023 when he saw the height of 2-year Treasury yields.
But as one of our researchers wrote over the weekend, “The last time Ackman was this apocalyptic, the S&P 500 bottomed out, and it marked a massive turnaround in the markets. I don’t expect one immediately, but there’s a good chance the carnage this week will mark a tradeable bounce.” 🧐 What Would the Sage Do? In I.O.U.S.A., we shelled out good money to animate Warren Buffett’s infamous 2003 Fortune article warning that America’s growing trade deficit was "selling the nation out from under us."
The Oracle of Omaha saw it clearly then — and still does now.  Following the global financial crisis in 2009, Buffett made a legacy bet on Burlington Northern Santa Fe. Not just for the trains. He was buying the rights-of-way — perfect real estate for fiber optic cables, the nervous system of the information economy then, and the veins of an AI-powered industrial revival now.
Fast forward to 2024, and Buffett's unloading Apple, his largest stock position, like it’s hot — dumping nearly half his stake. Why? Too much China risk. Too much iPhone dependency. And maybe, too much faith in a brand coasting on its past. Oh, look, another new iPhone model.
Still, Buffett hasn’t changed his tune entirely. His advice? “Don’t bet against America.” Just be smart about which parts of it you’re betting on. 🪧 The Mob's Misguided March The "Hands Off" protests have spread from D.C. to Denver and back to Europe. “Hands off!” what? Anyone with a beef took to the streets on Saturday.
We give the protestors props for some creative signs. One banner proclaimed: "They want Germany 1933? Let's give them France 1789."  “Hands Off!” protest signs in Denver yesterday, April 6, 2025 Points for historical references, but let's unpack that. In 1933, Hitler's democratic rise led to World War II. In 1789, the French Revolution's cries for liberty devolved into the Reign of Terror.
Mobs excel at being against something.
They decry the state, the elites, the bailouts. But ask them what they're for… and you get confusion and vague notions about increased government spending, debt forgiveness and more derangement anger versus Trump and, now, Musk.
Mobs aren't rational; they don't negotiate. And they often turn against each other… 🩸 Blood in the Gutters During the height of the French Revolution’s Reign of Terror, the guillotine in what’s now Place de la Concorde claimed over 1,200 lives. One chilling line, often attributed to a Parisian witness, says it all: “The blood ran in streams across the square, and the executioner was soaked up to his knees.”
That’s what happens when revolution turns inward — when justice becomes vengeance, and mobs become machines.
In one of the forgotten chapters of the story, Robespierre, the architect of the Reign of Terror, is sacrificed to the mob.
The most haunting and oft-cited quotes evoking the terror of the French Revolution — particularly the executions at the Place de la Concorde (then known as Place de la Révolution) — come from Sir Edward Gibbon, the famed English historian, who described the atmosphere in revolutionary Paris: “The streets of Paris flowed with blood; and the gutters ran crimson with the lives of its own citizens.”
Apocryphal? Maybe.
History has a dark sense of irony. Mobs tend to eat their young. 🔍 What's Different This Time? Is this just another market correction, or the start of something more profound? In 2008, Treasury Secretary Hank Paulson's midnight memo to Congress initiated the bailout era, introducing us to QE, ZIRP, and routine stimulus... ultimately driving the Federal Reserve into the red and the national debt to $36 trillion.
Yesterday, on Meet the Press, Treasury Secretary Scott Bessent struck a different chord. "We're building a more sustainable long-term economy for the prosperity of all Americans," he stated. Not a bailout — a blueprint. It might sound like political optimism, but it signals a shift. This isn't just about market stabilization; it's about rewriting global rules for trade. 🌐 Zero-Tariff Talks: A New Trade Paradigm? Amid the market chaos, whispers of a different approach to trade are emerging. President Trump and Argentine President Javier Milei have initiated discussions aimed at eliminating tariffs on approximately 50 export products, potentially paving the way for a broader Free Trade Agreement.
Similarly, Vietnam has floated cutting tariffs on U.S. goods to zero, while Cambodia proposed a 5% flat rate to preserve market access.
Elon Musk, a savant (literally) at reimagining ways of doing things, suggested over the weekend that a zero-tariff free trade zone between the U.S. and Europe would "make sense."
Strong sovereign agreements. Limited governments. Real trade. That's the idea.
Whether it's fantasy or blueprint depends on who keeps showing up at Mar-a-Lago with signed paperwork.
— ⚠️ This Is Why We Kept the Powder Dry Since last August, we've kept the Grey Swan powder dry. We saw the MAG 7 bubble for what it was — a dangerous concentration of global capital driven by a handful of tech names inflating each other's earnings with internal sales and vaporous projections.
Everyone, from IRAs to sovereign wealth funds, piled in. Few asked what would happen if those stocks turned south.
Meanwhile, we stayed in our lane, highlighting the opportunity in gold and bitcoin. And how Trump’s MAGA economy would create winners and losers, including a report on 50 stocks to avoid .
Now we know. The Dow, S&P 500, and Nasdaq are back to July 2024 levels, and the air is still getting sucked out of the room. In early trading in New York, there are already signs of a “relief rally” — that may be the story in the early part of this week.
Our trading desk is already considering index call options to patch the damage and position for a rebound.
But the real danger isn't over.
It's what happens after the money flees — when fear metastasizes from equities to politics, and the mob starts demanding heads instead of policies.
Look for another short fascination of mobs and markets at lunchtime in the Ripple Effect. It ain’t over ‘til it’s over.
‘Til then.
Addison As always, your cheerful reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)
How did we get here? Find out in these riveting reads: Demise of the Dollar, Financial Reckoning Day, and Empire of Debt — all three books are now available in their third post-pandemic editions. You might enjoy one or all three. 
(Or… simply pre-order Empire of Debt: We Came, We Saw, We Borrowed, now available at Amazon and Barnes & Noble or if you prefer one of these sites: Bookshop.org, Books-A-Million or Target.)
Please send your comments, reactions, opprobrium, vitriol and praise to: feedback@greyswanfraternity.com |
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