They are lonely souls, but the power of Wall Street executives and wealth managers telling their clients to ignore the noise remains.
Their message: The US economy is fine. The market will function via current pooks and reach new highs by the end of the year. In other words, tariffs, schmariffs!
I'm not saying I agree with that feeling. There is a strong indicator that the exact opposite is likely to occur. Major gatherings in the bond market foresee an economic slowdown that is considered good for bonds as the recession is accompanied by normal inflation.
Investors dislike tariffs because it slows down when countries respond to tariffs on US goods. Top hedge fund managers (about $12 billion in managed assets) describe the market mood as “very bad.”
Here's why: Trump will not silence about tariffs. Yes, this week's inflation lead was better than expected, but it unleashed the meaning. CPI is down 2.8%, with its core rate (excluding volatile food and energy costs) at the lowest in four years. It suggests that consumers are not spending in anticipation of bad things going forward. The closely monitored producer price index similarly showed low inflation.
Still, one of my top sources at UBS says that the big brokerages are increasing S&P's over 1,000 gains to 6,600 by the end of the year. Pimco, a leading asset manager with a focus on bonds, tells clients that there is a 35% chance of a recession. Veteran tech analyst Dan Ives said in a report he remains “solidly bullish” about the tech stock sector, which has recently achieved his biggest hit. He believes that “tech stocks will ultimately produce the highest ever in the second half of 2025 despite panicking the sale to start the year.”
Tariffs have a history of setting the economic darkness on fire. Economists believe they are the root of Great Repression. After the crash in 1929, Congress passed something known as Smoot Holy (named after several protectionist lawmakers), causing tariffs on imports of 20,000 people, causing a wave of global protectionism.
The flow of capital was suppressed. The US export sector has been destroyed as it has been upset by the initial shock of the crash and the subsequent slowdown. The farmers, devastated by the dust bowl, were one of the most difficult blows.
It's scary because history repeats itself. Still, it's not so scary for my optimist compatriots.
They point out that unlike the early 1930s, the US banking system is currently solid. Because of their strong balance sheet, they may be able to create a loan. There are no 1929 style crashes in the inventory, only corrections from the index height propelled by a few engineers trading at the nosebleed level.
Furthermore, the company's revenue is good. There is economic growth. We are not in a recession yet, so there is a long way to go in the economic meltdown.
Yes, Trump seems to love what the market hates: tariffs. But for all his stories, he is whimsical about using them, and often retreats when countries like Canada put a little cave at his demands. I have sources related to judges of the US Court of International Trade. This is a solution to a trade dispute between the United States and its global trading partners because the name is implied.
Trade-related lawsuits have been filed against Trump for attempts to abolish trade agreements, including USMCA, the successor to NAFTA, which covers transactions between Mexico and Canada.
“Despite all of this interference, there's actually nothing yet,” my source says.
