TARIFF TURMOIL: WHERE DO WE GO FROM HERE?
Jeffrey Buchbinder, CFA, Chief Equity Strategist, LPL Financial
Kristian Kerr, Head of Macro Strategy, LPL Financial
Lawrence Gillum, CFA, Chief Fixed Income Strategist, LPL Financial
Jeffrey Roach, PhD, Chief Economist, LPL Financial
Adam Turnquist, CMT, Chief Technical Strategist, LPL Financial
Markets got quite a surprise from the Trump administration last week in the form of tariffs above even the most aggressive forecasts, increasing the risks to economic growth and corporate profits. China quickly retaliated, Europe may follow with tariffs of their own, and some countries may boycott American goods. Some of these tariffs will be passed along to already inflation-weary consumers in the form of higher prices, which will drag down consumer spending while also putting anticipated Federal Reserve (Fed) rate cuts into question. However, there are some possible silver linings once the dust settles. We’re past peak uncertainty and maybe peak pessimism as well. Tariff rates should go down from here as negotiations begin. Interest rates should head lower as the deficit narrows, bringing borrowing costs down. Oil prices are down sharply. And tax cut extensions will be larger and easier to pass. Long-term investors may want to consider doing a little rebalancing into stocks this week after recent bond market gains. More active traders may want to wait for better headlines before stepping in.