Tariff fears are palpable, plus 🧁 weekend sprinkles 🧁
The Sandbox Daily (3.28.2025)
Welcome, Sandbox friends.
This morning I joined Nicole Petallides and Trading 360 on the Schwab Network to discuss today’s inflation print, tariff-related selling pressures, and opportunities in this environment.
Today’s Daily discusses:
tariff fears are everywhere
weekend sprinkles
Let’s dig in.
Blake
Quote of the day
“Maybe it's not about the happy ending. Maybe it's about the story.”
- Albert Camus
Looking into the face of tariff risks
What should investors do?
That is the question on everyone’s mind and coming up in every client conversation I’m having these days.
The venerable saying that “markets don’t like uncertainty” has taken over investors’ psyche to a degree I’ve never personally witnessed before. This week’s AAII and University of Michigan sentiment surveys confirm as much. The fear is palpable.
Investors can handle bad news. They digest it, discount it, and get past it.
But how can you move on when we don’t even know what is going on? Even skilled corporate executives and investment strategists – really bright people who have their thumb on the pulse – are distressed and seemingly can’t decide how this shakes out.
Positioning for outcomes right now is supremely challenging as we await the precise policy mix, and how it is delivered, next week on April 2, the day Trump has marked as “Liberation Day” for the U.S. economy.
Make no mistake, there is a great deal of attention to what exactly the administration will announce on Tuesday.
This is the day the Trump administration will provide the specific framework for tariffs on various countries and goods.
Remember, the 47 Administration has its sights set on shrinking the global goods trade deficit by raising U.S. levies to levels charged by other countries and counteracting their non-tariff trade barriers. It’s target? $1 trillion dollars.
Trump's whirlwind tariff offensive that took flight on his January 20nd inauguration has been marked by a dizzying barrage of threats, reversals, and delays, sometimes within hours or days of imposition deadlines, as his trade team formulates policy seemingly on the fly.
Finally, we should gain some clarity.
This market clearing event is so important near-term because it should give investors clarity during a period of tremendous uncertainty.
Although the potential distribution of outcomes from here seems wide, I think the market is vulnerable to a negative surprise.
It’s likely going to take something bigger than a 10% effective tariff rate to get a significant negative reaction in the market, dragging down the price of stocks everywhere.
But, the risk of more contentious action – perhaps a more aggressive reciprocal tariff agenda or 25% tariffs on key products for instance – that threatens to drive the effective tariff rate meaningfully higher is now being under-priced, once again.
See the graphic below which shows a survey of Goldman Sachs clients on the range of tariff outcomes as we game out near-term scenarios. Many are anchoring to an effective tariff rate in the 7-10% area.
And yet, there is still scope for real relief. This could happen either:
1) because the proposed tariffs are narrower than expected or
2) because the implementation schedule leads the market to believe that proposed tariffs will be negotiated down.
While markets are not priced for an aggressive downside move lower from here, there has clearly been increased investor focus on the April 2 deadline, including over the last few days.
This suggests that fear of bad outcomes might have prevented a broader recovery in assets after the sharp U.S. growth downgrade of the last several weeks and means there’s an obvious risk premium that could be reduced if outcomes are better than expected.
If tariff news comes in on the more benign side of the spectrum, we could see a meaningful relief rally higher and put more burden on the near-term data to justify a push higher in stocks.
Sources: Reuters, Bloomberg, Goldman Sachs
🧁 Weekend sprinkles 🧁
Here are the ideas, sights, and sounds that caught my attention this week – perfect for quiet time over the weekend.
Blogs
Discipline Funds – The Abundance of Complexity Requires Simplicity (Cullen Roche)
The Journal of Investing Wisdom – 10 Money Revelations in My 40s (Vishal Khandelwal)
TKer – The Unluckiest Market Timer I Know Made Another Poorly Timed Trade (Sam Ro)
Podcasts
All-In Podcast – Welcome Commerce Secretary Howard Lutnick (YouTube, Spotify, Apple Podcasts)
The Weekly Show with Jon Stewart – Why We Can’t Have Nice Things with Ezra Klein (YouTube, Spotify, Apple Podcasts)
The Tucker Carlson Show – Interview From Prison with Sam-Bankman Fried (YouTube, Spotify, Apple Podcasts)
Movies/TV Shows
Den of Thieves 2: Pantera – Gerard Butler, Pablo Schreiber, O’Shea Jackson Jr, 50 Cent (IMDB, Netflix, YouTube)
Music
LCD Soundsystem - Home (Spotify, Apple Music, YouTube)
Books
Vishal Khandelwal – Boundless (Safal Niveshak)
Pop Culture
Last Week Tonight with John Oliver – Sports Betting (HBO via YouTube)
Tweet
That’s all for today.
Blake
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Welcome to The Sandbox Daily, a daily curation of relevant research at the intersection of markets, economics, and lifestyle. We are committed to delivering high-quality and timely content to help investors make sense of capital markets.
Blake Millard is the Director of Investments at Sandbox Financial Partners, a Registered Investment Advisor. All opinions expressed here are solely his opinion and do not express or reflect the opinion of Sandbox Financial Partners. This Substack channel is for informational purposes only and should not be construed as investment advice. The information and opinions provided within should not be taken as specific advice on the merits of any investment decision by the reader. Investors should conduct their own due diligence regarding the prospects of any security discussed herein based on such investors’ own review of publicly available information. Clients of Sandbox Financial Partners may maintain positions in the markets, indexes, corporations, and/or securities discussed within The Sandbox Daily. Any projections, market outlooks, or estimates stated here are forward looking statements and are inherently unreliable; they are based upon certain assumptions and should not be construed to be indicative of the actual events that will occur.
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