The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Tariffs again?
July 9th was the previously scheduled tariff date. That is getting pushed back to August 1st. However, Japan and South Korea will be subject to a 24% and 25% tariff on August 1st, which surprised the market. Evidently, they will not be able to negotiate a deal in time to change this? The situation is very unclear and the announcements regarding Japan and South Korea are merely the first in what are expected to be many more. Risk-off was the broad market reaction. The S&P opened down about 20 points and fell steadily until bouncing a bit in the afternoon. The yield curve steepened some and Fed Funds futures still only price a July 30th cut with 5% probability. The total cuts for the 2025 are priced at 50 bips, 1 bip fewer than Thursday.
We are starting up the next chapter of tariff-talk. I’m surprised the market even sells off since the playbook is established and consensus is that tariff-talk is theater. I suppose that the threatened tariffs *could* be implemented, which would be a material bearish event. That said, the more the market drops, the less likely Trump will want to continue the downward path.
I don’t know why the President and the market are interested in doing the same song and dance from March and April. And yet here we are.
Like back in the day, tariff-talk is now the most important issue for markets. We’re beginning another round of volatility, driven by positive and negative announcements, or rumors, concerning tariffs. We’ve no idea what Trump is going to do or say so there’s no sense in pretending we do.
The big-picture thinking is that tariff-talk 2.0 is a buying opportunity. That said, the markets are still asking what if it’s different this time?
We’re going to find out together. Hold on to your hats.
See you tomorrow.
-Mike
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