Have markets been obsessing over the wrong Minsky?

After Liberation Day, we seemed to be headed for a “Minsky moment” in which global investors suddenly lose faith in the US dollar, triggering the kind of market collapse that economist Hyman Minsky warned about.

But after a big rally this week, the Nasdaq is back to within 1.4% of where it was before President Trump shocked the world with his “reciprocal” tariffs.

1.4% hardly seems like a disaster. 

Stocks may have recovered because the president seems to be having second thoughts on tariffs — especially after the CEOs of three major retailers warned that their shelves would soon be bare if the trade war doesn’t resolve itself more or less immediately.

That may have prompted the president to tell Time magazine on Tuesday that President Xi had called him seeking a deal on tariffs.

On Wednesday, Treasury Secretary Bessent also hinted at de-escalation, saying “there is an opportunity for a big deal” with China.

But even an immediate deal, however big, might not come soon enough, according to Bloomberg’s Chief Economist Anna Wong.

On this morning’s Odd Lotts podcast, Wong warned that, due to the long lead times in retail supply chains, “there’s a high probability that we’ll be seeing some empty shelves in the holiday season.”

Also this morning, China clarified that trade talks with the US haven’t even begun — in fact, they’re not even talking about talking as of yet.

The president seemed to disagree, telling a reporter, “They had a meeting this morning. It doesn’t matter who they is. We may reveal it later.”

Maybe “they” did have a meeting, who knows. 

But none of this seems concrete enough to explain this week’s rally in equities.

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High Tech India