There is a lot of expectation for the next chapter of the trade war – it is that in early August Trump will have to make decisions about tariffs. And it is known as it is with Trump: In one day he says he does things, the next day he advances these things. Meanwhile: US markets have made a lot of money
Markets are growing up with Trump. But they are about to face a huge test
by John TowfighiCNN
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New York CNN – Six months after Donald Trump’s second term, a quick look at the shareholder market can offer a reassuring image: S&P 500 has just closely closed above 6,300 points for the first time and recorded eight historical maxims last month.
If we look at the mid -year markets, it may not be evident that there was an unprecedented commercial turbulence, conflicts in the Middle East and relentless attacks on the independence of the federal reserve.
The values market and bitcoin rose to historical maximums, while obligations resumed a constant recovery and the volatility of oil prices decreased. To date, world markets have been shown to be extremely resistant.
The climate of calm on Wall Street is an extraordinary change compared to early April, when the S&P 500 reached its lowest level over a year and was on the edge of a low market after Trump revealed its initial “Liberation Day” tariffs.
Markets have floated near historical maxims, despite the underlying tariff uncertainty. Although investors have begun to ignore a plethora of concerns, US actions are being negotiated with historically expensive assessments as the tariff deadline autoimmed by Trump on August 1 is approaching. As Trump advances with his trade war, the impetus of markets will face a tariff test.
“What has maintained the actions on top is the premise that any rate increases on 1 August will not be permanent,” says Thierry Wizman, global exchange rate and macquarie group rates in a note.
“The perspective that ‘agreements’ are achieved after that remains a factor, we believe that it prevents investors from selling shares more aggressively,” says Wizman.
Jeff Buchbinder and Adam Turnquist, LPL’s Financial Strategas, stated in a note that S&P 500’s “V-shaped“ V-shaped recovery ”since its lowest point in early April was“ one of the most powerful post-formal recoveries in the history of the scholarship market ”.
The speed of market recovery has raised questions about whether it is supported by fundamental factors – or if underlying weaknesses may arise.
A market driven by the momentum
Although the market has suffered episodes of enormous volatility in recent months, bags continue to rise. The S&P 500 rose 5.2% since Trump took office.
Trump recognized the recovery of the market. Earlier this month, the president told NBC News that “tariffs were very well received,” noting that the “stock market reached a new record.”
The “slowdown” of the initial announcements of tariffs “eliminated the worst scenarios” for economic growth and inflation prospects, Blackrock investors said in a note that supported market recovery.
Steve Sosnick, a chief of the Interactive Brokers negotiation platform, tells CNN that recovery was also driven by impulse and fear of losing.
“Since the president’s turnaround in early April, who went around the market, a lot of money has been basically won by investors who assumed that these tariffs would be postponed, renegotiated or attenuated,” says Sosnick. “And if there is a trade that works very well for people for a long time, they will continue to do so.”
Meanwhile, Bitcoin reached last week a record of discharge over $ 123,000, while Republicans in Congress pushed with historical legislation to regulate cryptocurrencies.
Capital Economics consultant economists refer to a note that they believe that “the US economy will resist the global trade war”, allowing S&P 500 to continue to rise. However, according to the same economists, Trump’s “unpredictable approach” about trade and attacks on Fed’s independence can “trigger” a drop in actions.
“The widespread assumption among market participants still seems to be that the president will not follow the threats of increasing fares much more and that President Powell will remain in office, but this may be very optimistic.”
The S&P 500 has not registered a gain or loss of more than 1% since June 24. It is a sign that the momentum has decreased. Bitcoin was traded around $ 119,000 on Tuesday.
Megan Horneman, Verdence Capital Advisors Investment Director, said she thinks markets can be complacent with potential risks, as actions are historically expensive.
Although bags and obligations have come out relatively unscathed, one exception is the US dollar, which continued to record an abrupt fall. The US dollar index, which measures the dollar strength compared to the six major foreign currencies, has fallen almost 11% since Trump took office.
Gold and silver, however, continued to protect against Trump’s commercial uncertainty. Yellow and silver precious metals rose 30% and 35% this year, respectively.
Retail money in place of the driver
Recovery in recent months has been driven by retail investors, or individuals who buy their own actions, as opposed to Wall Street institutions, according to Venu Krishna, Barclays’s stratega of actions.
“Revaluation of risk by institutional money is still weak, which is likely that retail investors have been in the rise of the last stage of the climb,” says Krishna – who estimates that retail investors have invested more than $ 50 billion in global titles last month.
Investors who bought the fall when the markets fell in April were rewarded with an extraordinary march to new maximums. The S&P 500 has gained almost 27% since its lowest point in April. The Nasdaq Composite, high -tech, rose almost 37%.
The smaller NASDAQ 100 spent 62 days without down below its 20-day moving average, which constitutes the second longest series that there is a record of 77 days in 1999, according to Jonathan Krinsky, the BTIG investment company’s chief market.
And the money from Wall Street, which has been margin, is returning to the market. An inquiry carried out in July by Bank of America to global background managers revealed the largest increase in “risk appetite” that there is record. The inquiry has also revealed the most optimistic feeling since February.
Ethan Harris, a market observer and former Bank of America, stated in a LinkedIn post that Trump tariff ads can be characterized as “Trump always tries again,” as opposed to “Trump always to get along.”
“Your aggressive ads are a way of testing what it can ‘escape’,” says Harris. “Hence the constant flow of new threats, partial setbacks and then more threats.”
As actions remain close to record levels as Trump’s trade deadline is approaching, it remains to be seen if the markets will retreat from the president’s plan to interrupt international trade.
“The vigilantes of the titles may or may not have started returning this year,” says Harris. “Will the stock market become the vigilante of the trade war or will remain complaint?”
