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About an hour ago, the news broke that Treasury Secretary Scott Bessent told a group of investors at a JP Morgan event in Washington DC that he foresaw de-escalation of the current trade tension with China as the situation was unsustainable. The market was already rallying from oversold conditions after Trump caused further discomfort and uncertainty yesterday by calling Fed Chair Jerome Powell a “major loser” on Truth Social. Bessent’s comments caused a new leg higher.

Some are complaining of the headline whipsaw from the administration – and I sympathize with that. But I think what we’re seeing here is a walking back of the massive trade war Trump announced three weeks ago on “Liberation Day”. First, we got a 90-day pause. Now, Bessent says he sees de-escalation.

What’s going on?

I don’t think Trump foresaw the massive stock market selloff and global chaos the massive tariffs he announced on Liberation Day would cause. But he’s a pragmatist. His most famous book is called The Art of The Deal. My sense is that now he realizes he overreached and he’s walking it back to some extent. His concerns about China are real and valid but I think he’s fumbling around to a better way forward. If China is willing to talk, I think some kind of compromise may emerge and we may look back at Bessent’s comments this morning as The Bessent Bottom.

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