Stocks plunge as tariff uncertainty, growth fears prompt big risk-off move. (0:15) XPeng promises flying cars and humanoid robots in '26. (3:58) Hedge funds bail on China trade. (4:55)Show NotesHas the government forgotten what a real recession is? Episode transcripts: seekingalpha.com/wsb Sign up for our daily newsletter here and for full access to analyst ratings, stock quant scores, dividend grades, subscribe to Seeking Alpha Premium at seekingalpha.com/subscriptions.
Full Episode
Welcome to Seeking Alpha's Wall Street Lunch, our afternoon update on today's market action, news, and analysis. Good afternoon. Today is Monday, March 10th, and I'm your host, Kim Kahn. Our top story so far. The White House may have forgotten what a real recession looks like, according to one economist, but the financial markets are on full alert for a slowdown.
Stock and bond yields are tumbling again as the prospect of a soft landing for the U.S. economy looks further away amid on-and-off-again tariff announcements and the potential impact of mass government layoffs. The S&P 500 is off 2%, and the Nasdaq is down 3.5%. Both are testing lows not seen since September.
Dario Perkins, economist at TS Lombard, says, Both Scott Besson and Elon Musk have said it might be necessary to inflict some pain on the U.S. economy in 2025, in the hope that it will emerge stronger from any short-term downturn. They've said activity is being inflated by government spending, and perhaps a dose of detox can force public debt onto a more sustainable trajectory.
This is fueled talk of a beset put in U.S. bonds, not equities, and is amplified talk of a potential recession, and that sort of thinking is risky, Perkins adds. Perhaps the new U.S. administration has forgotten what a real recession is like. There hasn't been a real U.S. recession in 17 years, and the fake COVID-19 downturn may have given them an inflated sense of omnipotence. The U.S.
rebounded quickly from the pandemic and returned to full employment without any long-term scars. But that is only because, one, the recession was largely man-made, the result of lockdowns, and two, officials deployed the biggest fiscal and monetary policy response since World War II, he added.
In the bond market, the 10-year Treasury yield is back down near 4.2% and just 30 basis points above the 2-year yield. Kathy Jones, chief fixed income strategist at Schwab, noted, "...it looks like the bond market has decided to bypass short-term inflation concerns of trade barriers and immigration limits and focus on the long-term prospects of slower growth."
In addition, the VIX Volatility Index, also known as the Fear Gauge, is back setting new highs for 2025. David Bonson, CIO of the Bonson Group, says stock market volatility is much less about the bad news of tariffs and much more about the uncertainty of tariffs, while talk of tariffs is in a lot of ways worse than the implementation of them.
The tariff talk, reversal, speculation, and chaos only fosters uncertainty.
He says he does not believe the administration knows how the tariff situation will play out, but adds, if I were a betting man, I would say that it will persist long enough to do damage to economic activity for at least a quarter or two and ultimately result in a deal with different countries that make everyone wonder why we went through all the fuss.
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