Sentiment check: The last time US tariffs on China were this high, the S&P 500 was ~200 points lower, 4 Fed rate cuts were expected in 2025, and Wall Street was calling for a recession.
Sentiment is everything. https://x.com/KobeissiLetter/status/1921910115596136573
My guess is that 2025 will unfold like first Jaws movie where the inhabitants of Amity Island sigh in relief after they catch a great white shark, only to realize that a much bigger one is still stalking beachgoers. Tariffs are the small shark; a fiscal crisis is the bigger one. https://x.com/PeterBerezinBCA/status/1921848669210357922
ASX barely participates in the overnight US market celebration with XJO just under +0.6%, while where most retail speculators recent favourite haunt, XGD slumped -7.15%.
What has changed compared to the day before 'Liberation Day'?
> Tariffs still high- even 30% on China is high
> International trade has been compromised
> International travel volume to the US has been compromised
> Long term US yields still heading higher, implying bond market concerns over upcoming inflation
> Market now discounting Fed rate cuts from 3-4 this year to just one in Dec
The good news is that it should not get any worse than what the markets had imagined a month ago. I use the word 'should' rather than 'would' because you cannot predict Trump with any certainty.
But we're still no better than before Liberation Day.
Yet the S&P500 is now at 5,844, 3% higher than April 2 Liberation Day close of 5,670 just before the plunge.
