Predictably, Trump blinked & reversed most tariffs. As noted above, the US receives a lot of foreign capital purchasing US Treasury bonds, which keeps the dollar strong. Leaders of other nations sent a message via the bond market: deanblundell.substack.com/p/carneys-ch...

Is this all driven by one poor pricing decision? Of course not. But senior mgmt w/ no appreciation for market competition & price sensitivity love their magic spreadsheets. The better way to boost sales might be hiring more salespeople. Or lowering prices to sell more units at no marginal cost!

Whether it's burying denied operating costs in an acquisition budget, cutting back investments in the new acquisition, extending the ROI time horizon "due to market info not available during due diligence," acquisitions offer a lot of air cover. Worst case, bury all bad news in one rough quarter.

Sooner or later, driven by a need to regain a competitive edge, or to look action-oriented, the CEO will pursue acquisitions. Acquisition financing is easier to get than growing operating costs, especially with hockey stick revenue projections! Conveniently, it takes a while to merge the books.

Now, another price increase, higher unit sales targets, often a new head of sales &/or fresh salespeople asked to sell products whose development roadmap was curtailed to cut costs. So, selling less for more. CEOs can repeat this play a lot if there are "switching costs" limiting customer attrition.

It sucks to miss the revenue target, but luckily mgmt has other levers available to meet the profit target. Freeze travel, freeze hiring, demand all divisions cut costs, terminate "unnecessary" staff. Profit target met! Mgmt earns a bonus & plans to catch up in next year's revenue forecast. Uh oh!

Poor pricing occurs a lot in business. One version: New CEO demands price increases to look action-oriented, oh and to hit earnings targets triggering a performance bonus. Mgmt ups the price, adjusts forecasts. Buyers react, some buy less. Salespeople fired, heads roll. Revenue target missed!

Similarly, imposing a tariff on imported goods doesn't magically skyrocket government tariff revenue by the tariff amount multiplied by the import's current trading volume. Higher prices cause some to stop buying and others to find lower-cost substitutes or alternatives. Tariffs impact trade volume.

I’m referring to gifting another wine cooler from my coat in the corner! Turns out wine coolers were a great conversation starter, but often not enough to overcome my scruffy mullet and wiseacre persona. Say, Scruffy Mullet & the Wiseacres is a cool band name. So is Dancing With Meatheads. /fin

Alas, many girls sweet-talked me until I gifted them a wine cooler, then they drifted into the crowd to resume slam dancing with meatheads. But some girls showed more appreciation by, well, not to be salacious, let's just say it involved an exchange of sweet, sticky fluids in a quiet corner! 🧵

Sure, other dudes mocked me. A lot. But the girls noticed me, and some were definitely trying to get into my pants! Specifically, they wanted access to my left rear pants pocket, where I carried my spare wine cooler. One in my hand, one in my pocket, two more stashed in my coat in a quiet corner. 🧵

This is a lot. With a lifetime of business experience, I still only grasp some of it. My goal wasn't to shame or confuse but to help my elderly relative see this is more nuanced than TV pundits have made it. Alas, no dialog ensued. No minds were changed. At least until the TV says it's okay. 21/21

Lastly, the US isn't going bankrupt from deficit spending or national debt. Neither is ideal but the US sells debt to cover deficits. This infuses a LOT of foreign money into the US economy & keeps the dollar strong. 20/x

The entrepreneurial desire to source materials & labor where advantageous and to sell goods & services wherever there are buyers is beneficial in the US and abroad. Undisciplined tariffs & isolationism are self-defeating. Whatever's driving this, it's neither rational nor good for business. 19/x

We can already observe what happens when politicians try to "regain control of our economy" by conflating free trade with nationalism & exploiting xenophobia. The Brexit movement was inarguably suboptimal for the UK. A quest for power by a few racist politicians is no reason to tank an economy. 18/x

Free trade doesn't like uncertainty. Repeated threats & random retractions of inexplicable tariffs damage goodwill & hamper sales. Recessions also hamper sales. The US has long been a safe haven for foreign buyers & investors. The US dollar is the world's currency standard. This is now at risk. 17/x

Coincidentally, the US govt is generating some new tariff revenues. Elsewhere, there's an ongoing purge of govt expenses. How fortuitous that at the exact moment US companies will be begging for some relief, the govt is freeing up funds to offset what will likely "need" to be a sizable tax cut! 16/x

CEOs: Stop messing with foreign markets where we buy cheap raw materials, hire cheap labor, and sell a boatload of product! And if you keep messing with the US market, we're going to need more subsidies and tax breaks to keep our factories open! 15/x

With US manufacturers facing higher production costs, and with wages for US workers already much higher than workers in developing countries, most CEOs are not incentivized to rebuild American factories & hire American workers. Instead, they're placing demands on the US government. 14/x