The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Tariff decision
Overseas markets had a bit of drama. Asia fell a percent but Europe rallied a percent. Our premarket futures climbed small overnight but fell some in the premarket. The morning’s macroeconomic data disappointed. Inflation metrics ticked up Q4 GDP disappointed and PMI data disappointed too. All this data interferes with the existing economic narrative of strong activity and falling inflation. That said, today’s data was a curveball but did not change the consensus narrative. The S&P opened down about 20 points but rallied quickly, spending mid-morning up about 20-30 points. The big news of the day was the Supreme Court decision that the President’s tariffs, under IEEPA, were illegal. The markets did not react strongly to this decision although the moves were clear. Stocks rallied and bonds fell and the Dollar fell. Later in the day, President Trump held a press conference where he stated that he would implement 10% new tariffs, under different authorities, to make up for the negation of the IEEPA tariffs. Markets took this new negatively but shook it off after some time, returning to pre-press conference levels and hovering there for the remainder of the trading session.
Markets are reacting to the tariff situation as though things are effectively remaining the same, on a large scale. There will no doubt be new winners and losers as a result of this event. I have no idea who might be whom. The chaos of who gets their tariff rebates, and when, is now a messy to-be-determined item for all the individual entities that actually paid the Treasury. President Trump and his administration do not seem to want to make this easy. Trump mentioned in his press conference that getting the funds would end up in court and take five years.
What a headache.
Regardless of what all the affected companies now have to go through, the tariffs that the President is implementing have new constraints and may face new litigation. The tariff regime may, or may not, be eventually doomed but for the reasonable future, they are still present and still a cost.
For the broader market, this issue will move onto the back burner again and we will return the attention to Iran. Rumors of a weekend attack are swirling. The market has not taken them seriously but if it happens, Monday’s reaction will be based on the outcome. As we discussed yesterday, investors expect a clean result from the US’ standpoint. If negative consequences result, the market will suffer. Everyone will be keeping an eye on the news this weekend.
I hope there are no surprises.
See you Monday, have a great weekend.
-Mike
Visdom Market Commentary
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