Category Trump Tariffs

A Very Complacent Market… 

Recent developments in Trump's draconian trade policies — marked by steep tariffs, fluctuating commodity markets and geopolitical maneuvers — present a highly complex and uncertain landscape. Despite dramatic announcements and headline-grabbing tariff threats, markets have remained oddly resilient, while underlying forces quietly shift. For e.g., Trump's imposition of steep tariffs—such as 200% on pharmaceuticals and 50% on copper—has less to do with traditional economic rationale and more with political leverage

Why Earnings Expectations Feel Too High

Factset reported S&P 500 companies are "highly uncertain" for the balance of this year. This is well above the 10-year average of 179; and more than double the previous quarter. And it makes sense... it's impossible to know what impact tariffs could have over the coming two to three quarters (or more). But what's almost certain - any impact won't be positive. We can say with certainty that tariffs (even if only 10%) are an economic burden - where I estimate the cost to both companies and consumers to be more than $300B. So who will pick up the tab?

Brand USA Downgraded

The stock market has risen at a dizzying speed the past six weeks - up over 20%. I would reduce risk at these levels. We're now back at valuations similar to the beginning of the year - however the risks are now considerably higher. But let's say the net result is a tariff rate in the realm of between 10% and 30% - that would be disastrous. My back-of-the-envelope math estimates a substantial $300B "economic burden" that both companies and consumers will be forced to bear.

Do You Trust this V-Shaped Rally?

Markets staged a 'rip your face off' rally on the back of Trump's 90-day pause on 145% tariffs with China. Over the past three months - the rally ranks among the best we've seen in three decades. The question is can it continue; and what needs to happen? My primary concern - it's not supported by any major change in monetary policy...

Market Sweats Trump Tweets Over Powell

What matters more to the market: (a) a Trump tweet on any potential trade deal; or (b) Jay Powell's statement on monetary policy? If you ask me it's the former. Today's statement from the Fed was almost a non-event for the market. Powell maintained rates in the 4.25% to 4.50% target range (which was expected). However he told the market that the risk of "higher unemployment and higher inflation" have risen since their last meeting. That's problematic...

Relief Rally Likely to be Temporary

Despite the welcomed relief rally - stocks are not out of the woods. The uncertainty introduced from Trump has inflicted a lot of damage. Not only on the market and its earnings - but on investor, consumer and business confidence. However, the full extent of the damage will only be felt in the months (years) ahead. For example, Bankim Chadha of Deutsche Bank has reduced his target for the S&P 500 for the year, citing doubts over whether tariff policies will be abandoned before they have already driven the economy into a recession. This echoes what I said recently "we could already be in recession"

Trump Wants Lower Rates – Will He Get It?

Trump is demanding the Federal Reserve lower rates. However, Fed Reserve Chair Jay Powell - is having none of it (and nor should he). This is setting up another showdown between the President and the world's top central banker... a repeat of what we saw in 2018. As we all know Trump is a real-estate guy. Property is a business that relies heavily on cheap money. And this is the same lens Trump is taking with respect to his growth agenda. But he may not get what he wants...

Will Common Sense Prevail?

For the past few weeks we've watched Trump double down on dumb. There are no winners from tariffs - only losers. Perhaps the biggest loser of all will be the US consumer... forced to pay higher prices for almost all goods. Is that the goal? From Trump's lens - China has been "ripping the US off" for decades. Why does he think this? The President will cite the US' ~$1T trade deficit with the Middle Kingdom... which has doubled in 5 years. But this isn't necessarily a bad thing... here's why

Red Sweep Turbocharges the Market

Trump's decisive win last week has seen significant shifts in market sentiment. Markets are optimistic that Trump's tax cuts and deregulation will turbocharge growth. And they might. But what implications will Trump's policies mean for the US dollar, long-term bond yields and foreign trade? As investors, you need to evaluate both what is seen vs unseen. There will be both opportunities and challenges... however they will be very sector specific.