Wall Street was guessing “Is he or not doing” on customs tariffs since President Donald Trump took over last month and has promised to swift fees on both geopolitical allies and competitors. While the initial interaction in the stock market was cautious, the mood turns as the administration policies became increasingly confused with delay and exceptions that mix with egg discourse.
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(Bloomberg) – Wall Street had guessed “Is he or not” on customs tariffs since President Donald Trump took over last month a sweeping promising for geopolitical allies and competitors alike. While the initial interaction in the stock market was cautious, the mood turns as the administration policies became increasingly confused with delay and exceptions that mix with egg discourse.
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What is the investor doing?
To date, they were ignoring the noise and buying stocks. While the danger of a global trade war is still dangerous after Trump announced 25 % of the fees on steel and aluminum imports that will enter into force in March and the mutual tariff for many commercial partners who are expected to arrive in April, stock indicators It continues to gather, with the assembly, with a gathering with the S& P 500 index ended last week in points of the highest level ever. The question now is whether buyers who stimulate these gains reside appropriately what Trump will do – or seriously throws caution on the wind.
“Investors also realize that the customs tariff will not be punitive as expected, as this is good news for expectations,” said Andrew Selimon, director of the governor in Morgan Stanley.
However, Selimon pointed out that the weak market morale indicates that investors are still afraid of risk in management plans. He said a large part of modern flows to stocks comes from weaker contributors who can be more sensitive to shocks, making the market increasing interaction with the main headlines. The index of uncertainty in commercial policy has risen to its highest level since 2019, when it was a similar trade war brewing.
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“The index of uncertainty and implicit fluctuations of the market are usually moved by synonyms, and this relationship indicates that we can see a rise in volatility,” said Adam Ternniest, the chief technical strategy of LPL Financial, said: The index and the implicit fluctuations of the market are usually moved by synonyms, and this relationship indicates that we can see a rise in volatility, “said Adam Tereswist, the chief technical strategy of LPL Financial, usually moves.
Signs of volatility
While the fluctuation may rise in the medium term, investors do not put in its position yet. The hedge funds and other big speculators were on net future contracts associated with the CBOE fluctuations index, or VIX, for a period of 16 consecutive weeks, the Future Trading Committee exhibition. Their pure location is currently hovering near 59,000 contracts, the level that was last seen while relaxing the yen carrying trade in mid -July. VIX has risen the following month to levels that have not been seen since the epidemic, and the S&P 500 has declined, investors in the arrested stocks after the bet that low fluctuations will continue to decrease.
“When uncertainty and volatility are high, you do not get a market that continues to gather to records,” Turnquist added.
In other words, strategic expectations for a 12 % increase in the S&P 500 this year seem fragile.
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“The issue of customs tariffs is one of the biggest risk factors for financial markets, although it falls in the” well -known unknown “category, with the final size, scope and sequence in the air,” said Bill Sterling, GW & K global expert, said: Investment management. “Less noise and more policy vision will be welcome.”
Wall Street Banks agree. Goldman Sachs Group Inc. From the customs tariff pose a major danger on the negative aspect of their expectations for 2025. Evercore ISI indicated that the lack of clarity on politics has begun to influence feelings. An analysis of Bank of America Corp. showed. It is among the 50 largest S&P 500, the arrow's fragility, a measure of daily movements in stock prices for recent fluctuations, is directed at the highest level in more than 30 years.
“With more definitions and revenge, as well as government spending restrictions that may make it difficult to extend Trump's tax cuts from 2017, we expect modest gains in stocks over the balance of the year with more rise and landing compared to 2024.” .
Corporaate America, which is in the midst of the reports season in the fourth quarter, takes a warning look at commercial tensions. Ford Motor said last week that Trump's tariff was 25 % on Mexico and Canada, which was returned to March 4, will explode a hole in the American auto industry. On Friday, Trump said he would reveal a separate set of definitions on cars “around April 2”.
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Shock absorption
“The lesson that we learned from a brief decline of S&P 500 before delaying the Mexico/Canada tariff is that American stocks are patient and not vulnerable to response, but they do not have a great ability to absorb bad news,” including Lori Calvasina. The measurement index decreased by almost 2 % early today on February 3, the day on which Trump announced the fees on the neighbors of America, but it retracted a lot of decrease after it became clear that the duties were expelled.
Arrows may also seem more flexible than they are already. For example, on Thursday after Trump announced his intention to implement mutual definitions, the S&P 500 closed by 1 % because investors felt comfortable that he did not slap the fees on that day and hoped that the delay would be longer. However, when looking at the cap, more than 40 % of the profit came from only three shares – NVIDIA Corp. , Apple Inc. And Tesla Inc.
This reaches the heart of the arrow risks now. The largest technology companies have pushed shares in the United States over the past few years, and the difference between them and the rest of the market has become increasingly sharp with the development of artificial intelligence technology. But at the same time, these high -aviation arrows began to look fragile, with rich and nervous assessments about the start of Chinese AI.
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“Goldman Sachs Group Inc. said. , The ability of investors to continue to buy declines may diminish, because “everyone is in the group”. Since Big Tech was the key to declining purchase, any loss of confidence in the group puts the entire market at risk.
However, it's not as if Wall Street completely ignore the danger of customs tariffs. Instead, this leads to more selectivity in choosing stocks. The UBS Group AG basket has decreased from the arrival at risk from the definitions by 1 % this year, which is dramatically backward from the S&P 500 gain by 4 %.
“I think it is fair to say that the stock market may not be completely as it could have been without the threats of customs tariffs,” said Eric Lackeeis, the chief economist at RBC Global Asset Management. “I don't think people hear a 25 % global tariff, but I think they are happy with a higher tariff.”
– With the help of Jessica Menton and Matthew Griffin.
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