The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Tariff talk.
Futures were flat until President Trump threatened 50% tariffs on Europe and 25% tariffs on Apple. S&P futures essentially dropped 100 points in a handful of minutes. The S&P 500 opened down 70 points and bulls went to work buying the dip. Half the damage was repaired by lunch and the market was only off 20-ish points by the afternoon. Treasury yields barely moved and Fed Funds project 47 bips of cuts for the year, a level not seen since February. Capital flow was light again, 92%.
Nobody expected Trump to throw a fresh tariff hand grenade into the markets again. Well surprise surprise. Consensus opinion formed quickly on this, it’s perceived as a bullying tactic by the President. That said, what if Apple and Europe don’t want to give Trump everything he wants? What if we have to go down this road? What if Trump starts expanding tariffs again? What if all the tariff negotiations slow down and/or go nowhere?
The bears are getting dismissed as being too dumb to see that all this tariff talk is meant to rattle cages, get everyone to the negotiating table, and get good deals done quick.
But the bulls aren’t properly handicapping the process either. Getting through to the other side isn’t going to be easy nor will it be quick. We are going to experience friction and uncertainty along the way. What is the proper consideration for those realities?
Perhaps the bulls and the bears need to split the difference now that Trump is bringing tariff talk back.
We have a three-day weekend to see what else Trump says and how investors want to handle this new wrinkle. Enjoy Memorial Day weekend.
See you Tuesday.
-Mike
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