McDonald Flags 'Red Flashing Signals' on Fox Business

Investor and market expert Lawrence McDonald highlighted the warning signs that President Donald Trump's tariffs are producing weaker results, mirroring conditions leading up to the 1987 global market crash known as Black Monday.

McDonald, founder of The Bear Traps Report and a former Lehman Brothers vice president who co-wrote the bestselling account of the bank's 2008 collapse, appeared on Fox Business with host Cheryl Casone.

'We're getting diminishing returns on the tariffs,' McDonald said. 'But on the bond side, this is a global story.'

He explained that climbing rates are dragging bond prices lower, making bonds an increasingly attractive rival to stocks for investor cash.

'When bonds start to offer competitive returns relative to stocks, that's when the risk-reward deteriorates, it's very similar to the summer of '87,' McDonald said. 'I'm not saying we're going to crash, but historically, when bonds start to threaten stocks at this degree, especially with global rates across the G7 going up, investors watching us right now have to have extreme caution.'

McDonald's reference to 'diminishing returns' reflects a well-documented tension: tariffs have pushed the effective U.S. import tax rate to its highest level since 1969 without meaningfully shrinking the trade deficit they were designed to close, instead adding roughly $900 to the average household's tax bill this year.