Great Scott! Trade Deadline Drama: Is the Market Stronger Than a Locomotive?

Faster Than a Speeding Tariff!

Greetings citizens of Earth! It's your friendly neighborhood Superman here keeping a watchful eye on… well everything. Especially these trade deadlines! Apparently some folks down on Wall Street are a tad worried about these "reciprocal" tariffs President Trump's been talking about. Ninety days they say? That's barely enough time for me to knit a Fortress of Solitude sweater! But hey at least the stock market's hitting all time highs. It's like the world economy's saying 'Up up and away!'... right into potential economic turbulence. But don't worry I'm here to shed some light faster than a speeding bullet!

EU Negotiations: Hope Springs Eternal (Maybe?)

The US and EU are in talks to avoid a 50% levy on EU imports. A political deal might be struck but the consensus goes that the equity market can absorb steeper tariffs even if the broader economy struggles. BlackRock's Rieder for example said a higher tariff rate would further erode the U.S. dollar and add to near term inflation pressure. Still he remains confident the stock market will quickly move past any volatility.

Is the Market Just Putting on a Brave Face?

So the White House is saying these July trade deadlines aren't "critical." Right. That's like Lex Luthor saying he's just misunderstood. Investors seem to think the administration isn't planning on going full Kryptonite on us with those draconian tariffs. Instead they're bracing for a 'roll forward' of negotiations. Which let's be honest sounds about as exciting as watching paint dry. Even if the paint is red and blue and has a giant 'S' on it!

Vietnam's Trade Deal: A Cautionary Tale?

Speaking of trade deals the one with Vietnam is raising eyebrows. A 20% duty which is lower than the 46% rate Trump originally proposed in April but higher than the hoped for 10% baseline and according to Bank of America the tariffs are going up from here not down. That's making investors as nervous as Lois Lane when I forget to shave before a date. It seems to make the idea of future deals with other emerging markets nations a little worrisome.

Rockier Roads Ahead: Brace Yourselves!

Despite the record highs the expectation is that the equity market will get more rocky as the deadlines approach especially if investors are underestimating Trump's willingness to put into effect sharper levies. Many are confident the effective tariff rate will wind up somewhere closer to 10% a historically high level that nevertheless is better than a rate north of 25% that investors fear would result in outright recession. As I always say 'There is a right and a wrong in the universe and that distinction isn't hard to make.' Let's hope they choose right!

Final Thoughts: Can the Market Fly?

The S&P 500 is trading at 23 times forward earnings. Barclays is one of the many who are warning clients about "froth" in the market. But hey maybe this federal spending bill will give stocks a boost. Maybe pigs will fly too! The economy could be soaring to new heights or it could be crashing down to Earth faster than a Kryptonite laced meteor. Only time will tell. Just remember folks: Look up in the sky! It's a bird! It's a plane! It's me reminding you to diversify your portfolio and not put all your eggs in one LexCorp shaped basket! Until next time keep flying high!