Market Musings 6/2/2025
Quick thoughts on the markets and major portfolio news. Not on Ursa yet? Download Ursa from the App Store!
Markets rally in May on thawing US-China #Tariffs relations, but they might be cooling again…
The S&P 500 continued to rally off April up over 6% with investors regaining confidence as #Tariffs fears fade.
😮💨 May Tariffs
Like the last several months, May, again, was all about #Tariffs.
We exited April with the US and China in a stalemate on their massive #Tariffs－effectively a trade embargo. Early May, White House officials began softening rhetoric towards China (practically begged China to hold talks). The effort culminated with an “agreement” mid-month where the massive #Tariffs were paused on both sides for 90-days for negotiations.
Meanwhile, EU talks briefly stalled with the White House threatening to double the “reciprocal” #Tariffs to 50%. However, just a few days later, the White House walked back the threat with both sides re-engaging on negotiations.
We also saw the UK announced a “deal” to essentially promise to buy more for a little less #Tariffs, but we already had a surplus with them anyways…
😩 June Tariffs
As we head into June, there’s little doubt that it’ll be all about #Tariffs again.
We’re in the final month of the “everyone, but China” 90-day delay with only the UK (who had a surplus) reaching any semblance of an agreement so far. Will deals be made, will there be another delay, or will the #Tariffs get reimposed?
Meanwhile, negotiations with China have stalled and we could see China digging in their heels again. We could see the White House reinstate the massive #Tariffs again early to pressure China which could shutdown trade again.
And finally, courts have thrown a curveball into the equation with potential for the entire “reciprocal” #Tariffs policy to be declared outside the executive branch’s authority and stuck down.
However, investors appear to be desensitized to #Tariffs news at this point. What’s dubbed the “taco” trade, markets seem to be shrugging off any aggressive #Tariffs news with the expectations that someone will cave－in particular the White House. This sentiment has allowed markets to continue to rally despite the never-ending #Tariffs news rollercoaster.
We’re also cautiously optimistic that there could be a White House limit to the #Tariffs madness. However, we’re continuing to monitor economic data for a better read than the volatile day-to-day #Tariffs drama.
#ConsumerConfidence appeared to have rebounded in May, but that was before the US and China began bickering again at the end of the month. In addition, earnings outlooks, particularly for consumer facing business, were pretty poor. Did they throw in the kitchen sink or was it a foreboding warning?
Regardless, we think the longer this #Tariffs uncertainty continues, the harder it’ll be for consumers and businesses to remain resilient.
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The statements, opinions and analyses presented here are provided as general information. This article is the opinion of the author. Anything within this article should NOT be considered an investment recommendation or advice. See Ursa’s full disclosures here.
Original Photo by fauxels.