Tariff Talk Picks Up Steam… President Trump took aim on Friday at The European Union, threatening a heavy 50% tariff. The markets reacted….with Friday’s indexes closing lower. The S&P 500 finished the week, off 2.6% while the Dow Jones Industrial Average and Nasdaq Composite slipped 2.5% each. Lingering concerns of Moody’s Rating reduction of the U.S. financial status pivoted investors moving heavy capital into bonds yielding higher returns tempering stock buying. The 30 year Treasury yield ended the week at a high of 5.036%, while the more popular 10-year Treasury note closed at a yield of 4.508% after climbing the past 2 weeks. According to the Wall Street Journal, “bond yields rise when prices fall.” European stocks reacted to the President’s proposed tariff increases, falling 0.9% across the board. Many investors looking for stability pivoted to the Swiss Franc and Japanese Yen, ultimately affecting the dollar’s valuation. Andrew Slimmon, a senior portfolio manager at Morgan Stanley stated: “Stock prices are relatively sanguine because they now know that Trump will pivot on trade.” Finishing the week, the Senate voted 51–44 to “end the California EV Mandate,” giving buyers the ‘freedom’ to purchase any engine of their choice, with no phasing out of gasoline engines. This will affect over 20 states that have enacted the original legislation forcing electric automobile purchases by a specific date as California did. Now U.S. citizens will have a choice–EV’s, Gasoline or Hybrid. President Trump pivoted again. This time he put off implementation of the European Union’s 50% tariffs. As the week opened Tuesday (Memorial Day-Monday), investors and traders seized the opportunity, as heavy buying ensued driving stocks higher led by high techs with gains across the board. A recent survey showed consumer confidence has perked up after a 5 month steady decline. Those two positives propelled stocks upward. The Dow Jones jumped over 700 points while the Nasdaq finished up 2.5% and the S&P 500 added 2.1%. High techs were in demand as the Magnificent 7 were active and higher. It was a needed day on Wall Street after a dismal last week and poor Friday. Treasury yields eased a bit while the dollar showed signs of strengthening as foreign currencies lost some valuation. In other news President Trump threatened to invoke strong tariffs against Russia, citing a recent escalation of aerial attacks and a major ground offensive to acquire more land mass prior to possible cease-fire negotiations. Stocks opened soft on Wednesday after a strong come-back Tuesday, then lost steam and then settled back. The Dow Jones Jones Industrial Average lost 245 points for the day, while the S&P 500 and the Nasdaq both fell 0.5%. The US Court of International Trade decided to block many global imposed tariffs, citing them as illegal. Market reaction was minimal as weary investors need much more solid news to be awakened. Minutes from the Federal Reserve’s May 6-7 conference revealed that rising inflation remains a major concern, casting a cloud over the market for the day, and dampening future projections. Hopefully tomorrow will foster some hopeful news, giving investors buying reasons.
Thursday’s session opened on the upside, with high-techs the focus. The magnificent 7 stoked the Nasdaq with some serious buying as the ‘tariff-turmoil’ continued. The federal Appeals Court allowed the tariff actions to stand, negating the US Court of International Trade’s decision to halt tariff actions. Waiting for the next ‘step-to-fall’ will keep investors on edge… as ‘the courts battle it out.’
“Pennies From Heaven”….The once practical penny, in service for over 200 years is passing away, as the Philadelphia Mint stamps the last batch….ever. Giving way to the ‘nickel,’ then to be the starting coin, the everlasting penny will become a collectors dream. The first pennies were minted by the U.S. Mint in Philadelphia authorized by the Coinage Act of 1792. In 1909 President Lincoln’s face was added, the first president to have his face on a coin. President Trump proclaimed the penny “didn’t make sense.” ‘Wear you penny loafers with pride, keep that penny in your pocket.’
RUMBLINGS ON THE STREET
Bill Adams, chief economist at Comerica Bank, WSJ – “Americans have to buy a smaller house or in a less desirable location than they would have been able to afford if mortgage rates were low.”
Tim Hayes, chief global investment strategist at Ned Davis, Barron’s – “We can’t predict the future tariff decisions to be made by an unpredictable president. And speculation should keep anxieties elevated and…herding upward or downward in response to the latest announcements.”
Sarah Bowen Shea, the co-founder of an online running community. A penny lover and active runner, WSJ – “My philosophy is, ‘if you don’t stop for the pennies, you’re never going to find any silver.”
