When the thunderstorms pass eventually the sun comes out.

Markets 1 Donald 0; as is always the case, the market wins after a roller-coaster week. The rise in 10-year treasury yields and talk of contagion in markets finally forced the administration to alter its stance on tariffs as they announced he was postponing “reciprocal” tariffs for 90 days for everyone except China. Equity markets were set for a rally, as investor sentiment surveys were hitting panic mode; as an example, the Vix index was trading at levels last seen during Covid. Volume is often a good signal of peaks and troughs during periods of high volatility; a spike in volume usually signals a moment of capitulation and volume spiked on Tuesday. The pain gets too great for some; for others, it’s the land of opportunity.

Having said all that, spikes like these, which saw the Nasdaq gain over 12% in trading on Wednesday, do not necessarily signal a turn in equity markets’ fortunes. Sharp rallies, such as the one on Wednesday, are not uncommon in bear markets. In 2008, the bear market had another 5 months to go after a similar spike in the S&P 500 as the index fell another 30%.

The best case scenario for the global economy will be a modest hit to growth, a slight rise in inflation and a response from central banks to ease monetary policy. Expectations are for three cuts now from the Bank of England this year. I think one thing we can be reasonably sure of is that Mr Powell will not be bullied into any panic rate cuts by Mr Trump, although yesterday’s inflation data helped his cause to cut rates. On another day, yesterday’s economic headlines out of the US would have been received well, one would imagine, by investors as the Consumer Price Index declined 0.1% in March, below the consensus +0.1%. Additionally, the employment data, which was also released yesterday, indicated a resilient jobs market. Later today, we will get the monthly producer prices. We also get the start of the earnings season as JP Morgan, Wells Fargo and Morgan Stanley all release earnings later today. Mr Dimon has already expressed his views in the media that an economic recession is a more likely outcome from the uncertainty created by the tariff announcements.

That’s the problem: the new administration’s policy uncertainty will make planning difficult in the coming months, and investment will be delayed until greater clarity. Earnings season will not be all about the headlines reported, it will mostly be about what CEO’s are talking about how they navigate the current uncertain environment. Bear markets are painful, but the good news it brings the next bull market that bit closer. You just have to stay patient and of course solvent.