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discussion.fool.com - Wsj asks liquidationist

I’ve never seen the word “liquidationist” before but it doesn’t sound good.

It especially doesn’t sound good when the conservative, usually bullish Wall Street Journal uses “liquidationist” in a headline about the economy.

wsj.com - Is trump taking a liquidationist approach to the economy
Is Trump Taking a ‘Liquidationist’ Approach to the Economy?
The administration’s view that damaging the economy now could help it later comes with little upside for investors

By Jon Sindreu, The Wall Street Journal, March 12, 2025

During President Trump’s first term, stocks rode high on the belief that he would always pull back on policies that led to a selloff. Now, the administration is making a much tougher pitch: that even if tariffs and budget cuts cause a period of havoc, there are unexpected gains to be made on the other side.

The problem is there isn’t much evidence to make investors believe that. Indeed, such views edge close to the “liquidationist” approach historically espoused by laissez-faire economists, and most infamously associated with former President Herbert Hoover’s Treasury secretary who advised him to let the economy fall… [end quote]

Meanwhile, Fidelity’s news page is showing today’s Reuters article. Anyone reading the news on Fidelity is bound to be an investor.

Fidelity: News Article Top news
Analysis-Ominous market signals show more trouble could await US stocks

By Lewis Krauskopf and Suzanne McGee, Reuters - 6:09 AM ET 3/12/2025 Top News

NEW YORK (Reuters) - Investors are wary about worrisome market signs, after a steep U.S. stocks selloff that has wiped out more than $4 trillion in value and all of the gains notched following President Donald Trump’s election.

Among the signs are technical signals such as the S&P 500 on Monday closing below a crucial trend line, a key measure of the market’s internals weakening, a concerning pattern in volatility futures contracts, rising cash levels among investors and de-leveraging by hedge funds away from equities.

U.S. equities experienced a punishing drop this week, with the S&P 500 briefly falling into correction territory on Tuesday as uncertainty over Trump’s tariffs exacerbated worries about economic growth…

The ominous market signals add to growing anxiety about the economic outlook. A Reuters poll last week found 95% of economists across Canada, the U.S. and Mexico said the risk of a recession in their respective countries had increased following Trump’s chaotic tariff implementation…[end quote]

Of course, there may be differences of opinion. That’s what makes markets. The current dip may just be noise.

But the current drop is based on major tariff actions and deep uncertainty, not a few words from the Fed. The trade is deeply risk-off. That includes junk bonds as well as stocks, implying that traders are suspecting a coming recession may lead to corporate defaults.

Wendy