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The macro calendar's basically empty in the US this week.
The Fed will release minutes from the Jun
TACO. He doesn’t have it in him to stick to the levels he threatened. Will we get a new set of tariff poster boards this time around? Can’t wait…
Living in the time of Trump is amazing. You read the news and if there’s not one portrait of him it’s several. I recently overheard a group of people in workwear critically discuss Mr. Trump’s conduct in US-Japan tariff negotiations over rice during their coffee break, of all things and people. This is in Europe in a country unrelated to rice. I wonder if he’s a popular topic of conversation in Sri Lanka or among indigenous tribes yet. And the point is of course it’s discussion of Mr. Trump the person, not “US policy” or “America” or similar. Based on biographies it seems it was similar back in the times of the Third Reich, but I wonder if since? Certainly unparalleled showmanship. If the goal was fame, mission certainly accomplished – but is he Caesar or Caligula to posterity remains to be seen.
imho only way Powell and FOMC can justify cutting in July is if there is certainty in the tariff rate matter which seems highly unlikely at this juncture…but in these times … who knows… I surmise just a handful, or perhaps cabal of people “know…” …the world we currently live in…
Just saw a headline where the Dodgy Trump cuts to NOAA hurt forecasting around the Texas flood. Draw your own conclusions. With the start of hurricane season, bad and missing weather data could cause serious problems. And then there’s the disappearing FEMA monies.
H-Man, with some of your readers, I vote for TACO. The beautiful maiden is about to be thrown over the cliff and in rides Prince Charming to save the day. Little does anyone know that Prince Charming arranged to have her thrown over the cliff.
Current actual tariff collections, annual run rate, is $340BN. That is with the TACO pauses in effect since April.
Annual US corporate profits, all non-financial companies, is $11,800BN. That is from BEA data, includes private and public.
340 / 11,800 = 0.0288
So at current TACO, 290 bp. If less TACO, more bp. Granted impact should vary by industry and size, and this doesn’t include income tax offset, demand elasticity, etc. But 290 bp is a lot.
I do not understand how tariffs can fail to show up in either margins or price.
That is at the national level. For just the S&P 500, I don’t know. Some street analyst has estimated it, I’m sure.
For investors, faith in TACO isn’t enough, unless we think whole new levels of chickening out will be displayed. For Fed, they aren’t (shouldn’t be) in the TACO guessing game.
Basically reverting back to L-Day tariff levels.
Equity investors thinking: TACO will save us!
Equity investors not thinking: Markets have to get yippy first.
Equity investors also not thinking: TACO-man doesn’t care about your yippyness, only about bond markets.
Bond investors thinking: Powell will come to our rescue.
Bond investors not thinking: He didn’t last time.