The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Tariff confusion.
More tariff talk occurred today and it was unclear to markets what it all means. President Trump is stating that tariffs will go into effect on August 1st and there will be no extensions. The White House sent a bunch of letters to many, but not all countries, which lay out the tariffs that will go into effect. It is presumed, but not known, that countries could negotiate less onerous deals before then. What’s real? What’s bluster? What’s going to actually happen? Nobody knows. So markets didn’t want to panic but they didn’t want to ignore all this either. They essentially froze like deer in headlights. Treasury yields continue to climb, a bad fact pattern. Priced Fed cuts for the year shrank to 49 bips. The market is slowly removing easing expectations from its outlook.
Hmmm. There’s little to comment on even though the drama is high and the soundbites out of the White House are bizarre. Investors are getting a little nervous because of the trade-war rhetoric but they also don’t want to dump and run like in March and April. That lesson was powerfully learned.
So everyone’s kind of stuck, watching and waiting. We’re looking for *evidence* to suggest the coming direction for trade and economic activity. Sadly, for the foreseeable future, only tariff talk will exist. How will investors adjust as more tariff talk pops out of the White House?
Will we acclimate to it and brush it off? Will we succumb to repetition and begin to worry? Will we remain confused and on hold?
I honestly have no idea. Tariff talk 2.0 is a midsummer curveball. When it concludes, maybe we’ll all be fooled or maybe we’ll all be relieved.
What’s truly wild about the situation is that no matter *how* it finishes, everyone will say we *should have known!*
It’s a 50/50 outcome that everyone, in retrospect, will kick themselves for not having seen.
See you tomorrow.
-Mike
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