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Business Insider
3 days ago
- Business
- Business Insider
5 reasons Wall Street is in chill mode
Stock markets are shrugging off major risks and smashing records — so much so that even seasoned investors are scratching their heads. On Friday, the S&P 500 and Nasdaq 100 closed little changed after notching record highs on Thursday. Both indexes are hovering near the all-time highs they reached earlier this month, continuing a rebound after the post-"Liberation Day" sell-off. That rebound has stunned analysts, given the pile-up of macro risks, particularly President Donald Trump's ongoing threats to impose steep tariffs on key trading partners. Yet investors keep piling in — even if many are doing so with one eye on the exit. "In many ways, this is a rally that really no one's had much conviction in it," Andrew Pease, the Asia Pacific head of investments for Russell Investments, told Business Insider. He said the firm's analysis shows investors are neutral, not euphoric. "Everyone's very wary about this particular rally," Pease said. Wall Street veterans have spent months warning that investors may be underestimating the risks. "Unfortunately, I think there is complacency in the markets," JPMorgan Chase's CEO, Jamie Dimon, said earlier in July, referring to tariffs. Those concerns may soon be put to the test. Trump's proposed levies on trading partners — ranging from 10% to 70% — threaten to disrupt supply chains, fuel inflation, and slow global growth. "I think the market is too complacent about the damage of such high tariffs on both the US and the global economy," said Zhiwei Zhang, chief economist at Pinpoint Asset Management. It's not just tariffs that suggest trouble could be brewing. China's economic slowdown, Middle East tensions, and softening US data all suggest trouble could be brewing. So why are stocks still surging? 1. The US economy still looks resilient Despite inflationary concerns tied to Trump's tariff threats, the US economy remains on solid footing. As BI's Jennifer Sor recently reported, recession fears are fading. Big banks kicked off earnings season on a strong note last week. The consumer "basically seems to be fine," JPMorgan's chief financial officer, Jeremy Barnum, said on an earnings call on July 15. That's despite some cracks in the data. US GDP contracted 0.5% in the third quarter, and consumer spending growth slowed to 0.5% in Q1 — down sharply from 4% in Q4 2024. But retail sales rose 0.6% in June from May and the job market remains robust. The US added 147,000 jobs in June, well above expectations, while unemployment dipped to 4.1% from 4.2%. American consumers are, as top CEOs said recently, "a little numb" to tariffs and "very resilient," even as inflation ticks up. 2. Betting on the TACO trade Some investors are leaning on the "TACO trade" — short for "Trump Always Chickens Out." Markets are increasingly assuming that Trump's tariff threats are more talk than action. "Finally, the market is not wrong in pricing in a good chance that Trump will not follow through with his latest tariff threats, instead settling for some deal by 1 August," wrote Davide Oneglia, the director of European and global macro at Global Lombard, on July 16, referring to the trade deadline. Daniela Sabin Hathorn, senior market analyst at agreed: "The prevailing view among investors seems to be that these tariff threats are more bark than bite — a negotiating tactic rather than a firm policy stance." That's created what analysts call "asymmetry:" Markets could keep rising if talks go well, but they are vulnerable to sharp corrections if discussions break down. 3. FOMO + MOMO = a runaway rally Even as risks loom, traders don't want to miss out. That's fueling what analysts describe as a combination of FOMO, or fear of missing out, and MOMO, or momentum-based trading. Retail traders have been jumping back in, chasing gains as indexes push higher, even if they missed the earlier run-up. "MOMO and FOMO" are likely to dominate until proven otherwise," wrote Steve Sosnick, the chief strategist at Interactive Brokers, in a June 30 note. "Newton's First Law applies: A body (market) that is in motion will stay in motion until acted upon by an external source," he added. Sosnick said that implied volatility remains low, even as risks mount, suggesting investors are choosing to look past potential trouble. Pease at Russell Investments agreed that momentum could unravel quickly — but only if there's a clear macro shock. 4. Fed cuts are back on the table The Federal Reserve has signaled it could cut rates another two times this year — a boon for stocks. Lower rates reduce bond yields, making equities more attractive. They also encourage borrowing and investment. But rising inflation could complicate that path. In June, US inflation climbed 2.7% from a year ago, up from 2.4% in May. Dimon warned that the Fed might still hike if inflation proves sticky. He sees a 40% to 50% chance of another increase this cycle. 5. AI continues to power tech gains AI hype continues to drive the market, especially Big Tech. "AI is still the dominant theme, particularly as the Big Tech companies are giving solid earnings guidance and other companies are joining in as well, then that's the world in which you could see that this rally has further to go," Pease said, while cautioning that gains could become overdone. Bank of America's latest global fund manager survey, published July 15, shows 40% of respondents already see productivity gains from AI adoption. Another 21% expect gains within the next year. Caution still lingers Despite the optimism, there's unease under the surface. Summer trading is thinner, meaning volatility can spike quickly. Last year's yen carry trade unwind is a fresh reminder that things can turn fast. Trump's tariff threats are still on the table, but Oneglia thinks markets are right to be relatively unfazed. "Negotiations have not broken down and the market is acting rationally — at least on this," Oneglia wrote. Still, others are more cautious. "Ultimately, markets are at a crossroads," wrote Hathorn. "The rally, particularly in US equities, has been driven by optimism and underpinned by assumptions about political behavior." Until August, market asymmetry remains, so there's "room to rise on good news, but the potential for a swift and severe correction if trade tensions escalate," Hathorn added.
Deccan Herald
15-07-2025
- Business
- Deccan Herald
US deal: Why India must not trade under coercion
India is in the midst of negotiations for a trade deal with the United States under an environment of unpredictability laced with unabashed and overt arm-twisting that has become the signature call of that nation under President Donald Trump. These are understandably difficult negotiations, and a lot is at stake given that the US remains one of India's most significant trade partners, reflected in the trade numbers and in deep ties seen through the lens of the large and vibrant Indian community in the US and the number of Indians who flock to the US for work, tourism, or to study. The US has extended the deadline for a trade deal from July 9 to August 1 under the threat of punitive tariffs of 26% if an agreement is not reached by extension signals hope and optimism that a deal is possible, but it equally signals that the US side is pushing hard to see if India will bend under pressure. Another explanation is that the extension in itself is a case of 'TACO', or 'Trump Always Chickens Out', given that blanket tariffs on the rest of the world, as envisaged by the US, are not sustainable. But this is less likely with the dominant mood in Washington being to push hard, unmindful of the consequences, and India not being in a very strong position to dictate terms. Further, the US has extracted significant concessions from others, including the UK, and would demand that India, too, fall in course, the people of India would expect the country not to bend to anything unreasonable, even though making such demands has become the currency of the US. In this context, it is good to delink the success or failure of a trade deal with the performance or the influence of the Narendra Modi government. In other words, this government should ignore image management within the nation vis-a-vis the trade deal and take tough calls that protect Indian interests, even if this runs the risk of not having a trade deal. We may have a deal and be worse off as a nation if India allows concessions and gives in where it should not; we may equally not have a trade deal and be worse off in different ways because the tariffs will impact trade and hurt India and its latter will create disruption in the immediate, but it has chances of some mitigation with the US in a trade war against all that will likely bring some reversals over time, as its own economy will not be able to take the hit of tariffs beyond a point. Besides, this will be a signal to the world that India will not and should not be pushed. Having a trade deal by granting undue concessions can be far worse since it may open Indian markets in ways and to products and services that will have long-lasting impacts on the nation. The risks are many, but they will take their toll long after the deal is signed, so this is the space to be more watchful. Powerful US lobbies sitting close to, if not right within, the White House are at work pushing for what India will see as undue in dairy, agriculture this context, two hot-button items that appear to have emerged are the US push for exports of GM crops and cow milk to India. None of these are new demands. They cannot be part of discussions if the Indian side makes it clear that no negotiations on these are possible. For example, India requires that dairy products used as food must be from animals that are not given blood meals or given feeds containing internal organs or tissues of ruminant or porcine origin. This is a perfectly fair and reasonable requirement – cows and buffaloes used for milk production are herbivores and must not be given any animal products as milk in the Indian context is culturally sensitive, given that it is used for religious offerings and in sweets for auspicious occasions. Yet, the US position as articulated in the US' '2025 National Trade Estimate Report on Foreign Trade Barriers (FTB)' is that Indian requirements 'lack a discernible animal health or human health justification'. Such a sectoral opening up will kill the Indian dairy sector. It will mix up imported US milk that contains recombinant bovine growth hormone (rBGH), which has been approved in the US since 1993 to increase milk production in cows but is banned in the European Union and Canada. Drinking milk from these sources is linked to higher levels of IGF-1 in humans. IGF-1 is a growth hormone which, at high levels, is said to be linked to prostate, breast, colorectal, and other cancers though the linkage is not definitive, according to the American Cancer GM crops, the Alliance for Sustainable and Holistic Agriculture, or ASHA-Kisan Swaraj network, which brings together farmers and agriculturists, has written to the government appealing against any concessions to the US. In a letter, the alliance said: 'We strongly urge you to stand firm and unequivocally reject any such move, which would have serious and irreparable implications for India's agriculture, biosafety, public health, rural livelihoods, and seed and food sovereignty.'.The US wants much more than this. Take the example of stent prices, which were capped in India when the regulators found that price inflation was extremely high. Everyone made merry while patients suffered, till the caps came in. The US in the 2025 FTB report has argued that 'price controls (on coronary stents and knee implants) have not been increased in line with inflation and do not differentiate based on the cost of production or technological innovation, which dissuades US companies from serving the market.' The drift is clear. The US wants to extract, if not extort. India must resist..(The writer is a journalist and faculty member at SPJIMR; Syndicate: The Billion Press)
15-07-2025
- Business
Markets are shrugging off Trump's tariffs. Experts explain why.
President Donald Trump in recent days slapped tariffs as high as 50% on dozens of countries, restoring the type of aggressive trade policy that sent stocks plummeting a few months ago. The new round of levies prompted little more than a shrug on Wall Street. Stocks even recorded gains on Monday as investors looked past tariffs over the weekend targeting the European Union and Mexico, two top U.S. trade partners. Trump has rolled back many of his steepest tariffs over recent months, giving rise to an investor posture known as TACO, short for Trump Always Chickens Out. That view has largely won out among investors on Wall Street, who have come to see tariff announcements as diplomatic fodder rather than firm policy declarations, Bret Kenwell, U.S. investment analyst at eToro, told ABC News. Investors, Kenwell added, are experiencing "headline fatigue." "There's a realization that all of these trade headlines and policy proposals are a negotiating tactic rather than a hardline stance," Kenwell said. As recently as April, the markets gyrated in response to Trump's tariff announcements. When Trump unveiled sweeping " Liberation Day" tariffs on April 2, the major stock indexes lost about $3.1 trillion in value the next day, suffering their biggest one-day decline since the onset of the COVID-19 pandemic. In all, the Dow Jones Industrial Average dropped nearly 4%, while the S&P 500 fell 4.8%. The tech-heavy Nasdaq tanked nearly 6%. Days later, on April 9, Trump delayed a major swathe of the tariffs for 90 days, saying he would pursue trade negotiations with scores of targeted countries. The move sent the stock market to one of its largest ever single-day increases. The Dow soared nearly 8%, while the S&P 500 climbed 9.5%. The Nasdaq increased a staggering 12%. "Once the administration opened the door to a negotiating period, that's when markets realized there's a point where the administration was willing to back down," Kenwell said. "Once that was the case, they realized it's not going to be an endless run on trade policy. One month later, Trump established a trade framework with China, ratcheting down tariffs on the top U.S. trade partner from 145% to 30%. That day, each of the major stock indexes climbed at least 2.8%. When Trump doubled tariffs on steel and aluminum in early June, however, investors didn't appear to care. The major indexes were essentially unchanged. For his part, Trump has rejected the notion that he backs down from tariffs, insisting the on-again, off-again levies make up a key part of his negotiation strategy. When asked about the TACO moniker at the White House in May, Trump said; "I chicken out? I've never heard that." Despite a rollback of some tariffs, levies are highly elevated relative to where they stood before Trump took office. Taking into account recent tariff announcements – which are set to take effect on Aug. 1 – the effective tariff rate registers at 20.6%, the highest such rate since 1910, the Yale Budget Lab found. Consumer prices rose 2.7% in June compared to a year ago, marking a notable surge of price increases as Trump's tariff policy took hold, government data on Tuesday showed. "Call it TACO, or corporate resiliency, whatever you want. Tariffs are coming due in the form of higher inflation, thinner margins, or a combination of both. I'm still not sure people have processed this," Callie Cox, chief market strategist at Ritholtz Wealth Management, told clients on Tuesday in a memo shared with ABC News. Key measures of the economy have proven resilient in recent months, however, defying fears of sky-high inflation and a possible economic downturn. Even after the recent uptick, inflation remains lower than the pace registered in January, the month Trump took office. For markets to demonstrate greater concern about tariffs, Kenwell said, investors would "need to see significantly higher inflation." "Markets find a way to shrug off bad news," Kenwell added. "It doesn't make them invincible but it does make them resilient." Tariffs on dozens of countries stand poised to take effect on Aug. 1, making it a potential inflection point for the market view of tariffs. Analysts at France-based financial firm BNP Paribas showed minor concern in a memo to clients shared with ABC News on Tuesday. "The risk of an escalatory tit-for-tat scenario has risen," BNP Paribas said, before acknowledging that it expects "deals will be struck by 1 August to limit the further increase in tariffs."
LeMonde
12-07-2025
- Business
- LeMonde
How Trump adapts his tariff threats for economic, diplomatic and ideological ends
Donald Trump added the European Union to his list of countries facing the threat of new customs duties on Saturday, July 12. In a message posted on Truth Social, his private social network which has become the primary communication channel for the White House, the US president stated that products imported from the European Union would be subject to a 30% surcharge if no agreement is reached that meets his expectations – specifically, a "complete open" European market for American goods. On July 7, Trump acknowledged that his commercial threats had yet to yield results and, by executive order, postponed the deadline for implementing the unilateral tariff increases – originally announced on April 2 and already delayed once – to August 1. These repeated delays have earned the US president an unflattering acronym: TACO, for Trump Always Chickens Out. Markets, for their part, were largely unmoved when the White House occupant again brandished the threat of tariff hikes in letters sent to major US trading partners, including South Korea and Japan, on July 8. After Canada on July 10, Mexico was the next recipient of these messages posted on Truth Social on Saturday. While the United States' northern neighbor was threatened with a 35% increase in import taxes, a 30% hike was directed at its southern partner. In both cases, the president mixed often questionable economic arguments with considerations unrelated to trade.
Politico
08-07-2025
- Business
- Politico
Trump moves fast to kill green energy tax breaks
President Donald Trump is wasting no time hastening the demise of green energy tax credits — in keeping with the big, beautiful bargain he made with conservative Republicans. The deal with Republican holdouts to end incentives for wind and solar power paved the way for passage of Trump's mega-tax-and-spending bill. Trump's July 4 signature on the bill completed the legislative assault on the Inflation Reduction Act's subsidies for renewable energy. But just how quickly the White House turned a handshake deal with House hard-liners into a presidential order — almost overnight — is notable, Christa Marshall reports. Trump signed an executive order Monday that calls for the Treasury Department to strictly enforce the end of the tax credits for clean energy projects. It directs Interior Secretary Doug Burgum to look for ways in which wind and solar are getting preferential treatment. And it gives Treasury Secretary Scott Bessent 45 days to implement provisions in the law aimed at preventing projects from partnering with 'foreign entities of concern.' That means primarily China, the globe's dominant source of solar and battery technology. The deadlines are tight. Wind and solar projects receive tax credits as long as they start construction by mid-2026, while projects that start later would need to be placed into service by 2027. In comparison, nuclear and geothermal resources have until 2033 to obtain tax credits. Promises made, promises kept Trump's eagerness to make good on his promise to Rep. Chip Roy (R-Texas) and other budget hawks fits neatly with his disdain for Biden-era climate policy. Trump has rebuked the previous administration's goal of shutting down coal plants in favor of carbon-free wind and solar generation, which he recently called 'windmills, and the rest of this 'JUNK.'' Monday's order to Treasury and Interior is also striking for another reason: The famously transactional president isn't always known for holding his ground on big policy announcements. Wall Street investors started using the term TACO ('Trump Always Chickens Out') after Trump repeatedly backed away from threats and deadlines for slapping high tariffs on U.S. trading partners. The president is walking back a pause on the delivery of U.S. weapons to Ukraine in the war against Russia. And last month's bombing of Iran — raising the possibility of deeper U.S. involvement in a Middle East war — came despite the president's boasts of keeping Americans out of foreign entanglements. After last weekend's tragic rains and floods in Texas, which took the lives of more than 100 people, including 27 kids at a Christian summer camp for girls, the seriousness of the administration's on-again, off-again talk of abolishing the Federal Emergency Management Agency faces a real-world test, as do Trump's cuts at the National Weather Service. But on his long-running hostility to green energy, Trump has remained constant. It's Tuesday — thank you for tuning in to POLITICO's Power Switch. I'm your host, Joel Kirkland. Power Switch is brought to you by the journalists behind E&E News and POLITICO Energy. Send your tips, comments, questions to jkirkland@ Today in POLITICO Energy's podcast: Chelsea Harvey breaks down why accurate federal forecasts weren't enough to save lives when catastrophic floods swept through central Texas last week. Power Centers Supreme Court says Trump can order mass firings The Supreme Court gave Trump the go-ahead today to launch his plan to fire thousands of federal workers, write Josh Gerstein and Hassan Ali Kanu. The high court's unsigned order grants the administration's emergency appeal to enforce a February executive order that instructed agencies to carry out 'reductions in force.' The justices said they were not assessing the legality of agency layoff plans, and litigation over the downsizing efforts is sure to continue. The decision lifts a lower court's injunction that had blocked 21 agencies from complying with Trump's order. Help wantedThe National Weather Service still hasn't posted job ads for vacant positions in depleted forecast offices around the country, Daniel Cusick writes. The agency has lost nearly 600 employees in recent months, as the administration fired probationary employees and made early retirement or buyout offers. Those vacancies are now in the spotlight after catastrophic floods in Texas killed more than 100 people, including dozens of children. The Trump administration had told the weather service to hire 126 meteorologists and other specialists more than a month ago. A spokesperson for the National Oceanic and Atmospheric Administration, which oversees the weather service, said the process to post job ads 'is currently underway.' Meanwhile, experts are warning that Trump's upcoming cuts to weather and disaster spending — including warning systems and flood projects — could mean new risks for areas around the country, write Scott Waldman and Chelsea Harvey. 'Lives are going to be lost, property is going to be damaged,' said Rick Spinrad, who served as NOAA administrator under former President Joe Biden. Emergency coal for AI?The Department of Energy released a report Monday that lays the groundwork for keeping open coal and gas plants slated for closure, Peter Behr writes. The analysis details the worst-case scenarios if the energy needs of artificial intelligence expand beyond the grid's capacity — including weeks of power outages in some states by 2030. The report is widely seen as setting the stage for Trump to use an emergency provision of the Federal Power Act, written for wartime use, to order fossil fuel plants to keep running. 'Absent intervention, it is impossible for the nation's bulk power system to meet the AI growth requirements while maintaining a reliable power grid and keeping energy costs low for our citizens,' said the report. In Other News What climate change?: The Department of Energy has hired at least three scientists who doubt the overwhelming scientific consensus on climate change. Safety takes a hit: The White House is planning to eliminate a small agency that investigates chemical disasters to understand what went wrong. Subscriber Zone A showcase of some of our best subscriber content. The far-right group Patriots for Europe will be in charge of drafting the European Parliament's position on the EU's 2040 climate target, leading centrist and left-leaning members to fear that the group will sabotage emissions-cutting efforts. Northeast states have agreed to a new declining cap for power plant emissions as part of updates to the nation's oldest cap-and-trade program. The Interior Department will ask job applicants to answer several essay questions inked by the Trump administration that have been criticized as a litmus test for loyalty to the president's agenda. That's it for today, folks! Thanks for reading.
