So, what's going on here, anyway?

Here is my take.

The current set of policies is a cash grab from the private sector to the government sector -- or what will remain of it anyway, as it's being revamped to not pay the cash back into the economy as gov't services like people are used to. Tariffs are a tax, and like any tax they reduce economic activity. Uncertainty around the policy duration also is impacting the equity risk premium, meaning high P/E stocks have now unsupported valuations.

I expect a little bump here, to 5250-5550; then reevaluate. If the negativity persists and today is as much of an "up" day as we see, then that becomes far less likely. There is some evidence of intensive margin calling, with treasuries, and gold, all selling off.

Short term bonds are a good choice right now. Regional banks can and will fail as debt is not repaid (you can short them with an ETF), and the big banks also could fail, but that might be less likely due to the "TBTF" dynamic -- in that case, depositors get "bailed in", which is to say, partly wiped out, hardly a good investment outcome.

Short term treasury bonds can be depended on to do well NOW, but I'm not sure forever. And long term? More risky. You can already see the 2 year really outperforming the 10, which remains stubbornly high. I think Bessent will ultimately fail, in light of not having any realistic plan to actually improve the government's long term finances - he is reducing spending in the short term, but guaranteeing a depressionary small future economy upon which to collect tax revenues.

Not a cheery picture, but I think one worth serious consideration if you still are blinded by the thought that certain things “cannot” happen.