A Bull - And a China Shop

Have you ever watching the film, Rounders?

Matt Damon plays Mike McDermott, a law student by day, poker player by night. In an effort to help is childhood friend, he guarantees that friend’s debt and then needs to play poker - and win! - to pay it off.

In a pivotal scene in the movie, Mike finds himself back in place he thought he’d never have to see again. It’s an underground poker game against the ruthless Teddy KGB.

I re-watched the movie last month with my son. It’s fantastic and still holds up to today’s films.

It’s also the perfect metaphor for today’s newsletter.

I’m very bullish on America.

When a leader has a vision, and sees the path toward the goal, they silence the noise and focus. My vision is on America, how great it is, and will continue to be. Does it have warts, sure, a lot of them. But, as the greatest start-up in all recorded history, The United States has yet to hit its peak.

Speaking of peak. As I write this we’re at peak pessimism, peak fear, peak unknown, and peak “how are we to plan in this environment?”. From a personal investing standpoint, after a bloodbath like we just saw, the market is positive 1 year, 3 years, and 5 years later with 100% conviction. That’s bullish!

When zoomed out, major events in history which crush business confidence, always look like small blips on the screen of growth. I’m willing to bet that’s the case with this week’s actions as well. We will look back, say “remember Liberation Day?”, and have a laugh, and a cry.

When sentiment sways too far in one direction, it’s not contrarian to take the other side, it’s common sense. Right now sentiment is negative on the business environment as a whole. The consensus is we will have a recession. I’ll wager things aren’t as bad as it seems, and won’t get as bad as we think.

I’m silencing the tariff noise. Not ignoring it - heck, it’s all I talk about - but letting it breathe over there in the corner, and focusing on what I control. Because none of us control the tariff cycle.

Tariffs be damned! Or read Casey Abel’s post for an even better perspective.

There was a lot of great writing about tariffs this week, and I tried to play catch up with my takes and opinions. Of course, as soon as I hit “Post”, the tariffs changed and what I had just written was already outdated. Seeing 5-day-old posts about tariffs in my feed, reminded me about reading the letter from my great-grandmother I found while cleaning out the basement.

It was funny how many posts wondering “if” brands would pass along the tariff cost. It made me question how much margin the average consumer actually thinks are in these products.

Of course companies and brands want to be strategic as possible. They want consumers to purchase their product, enjoy it, tell friends about it, and grow. However, when costs rise, it’s not necessarily smart business to eat that cost. In this scenario, one powers through Excel spreadsheets, reviews scenarios, and talks with management, or ownership, about what is possible. If you’re producing in China, that work was done PRIOR to Liberation Day. And then another 34% was dropped on top of that analysis.

Does anyone really know what the tariff on Chinese goods are today, Thursday, at 8am Pacific? Of course not. Even the White House can’t explain it properly. So we’ll have to wait and see what happens next.

Back to Rounders. The climatic scene at the end of the move is relevant in today’s tariff discussion. In the movie, Teddy KGB eats Oreos while he plays poker. Mike, struggling to pay off his firend’s debt, notices that Teddy KGB plays the hands differently after he twists apart the Oreo.

That’s a tell. Mike sees the tell.

He begins to play his hands differently. And begins to win. Roll credits.

A tell is when someone does something - a fidget, a comment, a motion or movement - that reveals something about themselves.

This week, the world figured out that this administration is simply twisting apart Oreos, and called their bluff. Tariffs are “delayed” for 90 days, except for China, who get’s more tariffs. (What’s it up to now?)

How can anyone plan for the next 90 days? Greg Shugar said it best.

I’m bullish on the future, and you should be too. But, we have to acknowledge that the future is full of more unknowns now than we usually have. There is simply less clarity within the global business environment, and that affects everyone. The biggest unknown is China. Can we still be bullish without China as a trading partner? The odds against that are longer than we’d all like. Which means eventually this gets solved in a win-win deal that benefits the world. The parties will come together, and something bullish for our future gets worked out.

I mean, TikTok has to be sold, my gosh!