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The Biggest Takeaway from Trump’s Tariff Reversal

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What’s in Today’s Report:

  • The Biggest Takeaway from Trump’s Tariff Reversal
  • Why Are the Dollar and Treasuries Falling? (Not Good)
  • Monthly Bitcoin Update

Futures are modestly higher as markets bounce from Thursday’s declines, despite further trade war escalation.

China increased tariffs on U.S. goods to 125%, further escalating the global trade war, although markets, for now, are digesting the move.

Today focus will remain on economic data via PPI (E: 0.02% m/m, 3.4% y/y) and Consumer Sentiment (E: 55.0).  Like Thursday, better than expected numbers won’t help stocks in the near term (they are totally dominated by trade and global macro trends right now) but it will push back on stagflation fears (which is an underlying positive).

Looking at the Fed, there are several speakers again today, including Collins (9:00 a.m. ET), Musalem (10:00 a.m. ET) and Williams (11:00 a.m. ET), although they shouldn’t move markets.

Finally, earnings season begins in earnest and important reports today include:  JPM ($4.62), BLK ($10.43), WFC ($1.23), and MS ($2.23).

Is the Tariff Announcement A Bearish Gamechanger?

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What’s in Today’s Report:

  • Is the Tariff Announcement A Bearish Gamechanger?
  • Jobs Report Preview

Global markets are sharply lower as S&P 500 futures fall three percent in response to President Trump’s worse than feared reciprocal tariff announcement.

President Trump announced baseline 10% tariffs on virtually all imports and dramatically higher tariffs on numerous major trading partners, dramatically intensifying the global trade war and spiking global recession concerns.

Today focus will remain on trade and any hint that the announced tariffs could be negotiated lower will help stocks bounce, while the administration dismissing negotiations will only add more downward pressures to markets.

Away from trade, there are several important economic reports today including Jobless Claims (E: 226K) and the ISM Services PMI (E: 53.0).  If those numbers disappoint, the selling will get worse as recession fears surge.  Finally, there are two Fed speakers today, Jefferson (12:30 p.m. ET) and Cook (3:30 p.m. ET), although they shouldn’t move markets.

Investors are likely waiting on specifics before reacting

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Investors are likely waiting on specifics before reacting: Sevens Report Co-Editor Tyler Richey Quoted in S&P Global

Markets shrugging off Trump tariff threats so far

Investors are likely waiting on specifics before reacting, although the tariff threats could signal some forthcoming broad market volatility as new and fluid trade policies inject some uncertainty into the macroeconomic outlook, said Tyler Richey, a co-editor with Sevens Report Research.

“As forward-looking discounting mechanisms, equity markets in particular love stability and a clear consensus outlook for future growth trends,” Richey said. “The implementation of new tariffs would derail the current Wall Street consensus that the Fed is in the process of nailing a soft economic landing that will result in strong, AI-amplified earnings growth in 2025 driving the broader stock market to new records.”

Richey with Sevens Report believes that the upcoming tariffs will likely have a greater impact on equities than those in Trump’s first term.

Also, click here to view the full S&P Global article published on January 24th, 2025. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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Were Tariff Fears Exaggerated? (No. Two Reasons Why)

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Were Tariff Fears Exaggerated? (No. Two Reasons Why): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Were Tariff Fears Exaggerated? (No. Two Reasons Why)

Futures are slightly lower following a major central bank rate hike and despite better-than-expected economic data.

The Bank of Japan raised interest rates 25 bps, as expected, and signaled further rate hikes are coming (also as expected).

Economically, Euro Zone and UK Manufacturing PMIs slightly beat estimates but both remained in contraction territory.

Today we get the most important economic reports of the week via the January Flash Manufacturing PMI (E: 48.9) and Flash Services PMI (E: 56.7) and again, markets will want to see in-line to slightly soft data.  Stronger than expected readings would likely boost yields and pressure stocks.  Other economic reports today include Existing Home Sales (E: 4.16 million) and Consumer Sentiment (E: 73.2).

Turning to earnings, the key report I’m watching today is AXP ($3.03) as that will give us insight into consumer spending and the stronger the report, the better.

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What More Tariffs Mean for Markets (Lower Market Multiple)

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What’s in Today’s Report:

  • What the Tariff Threat Means for Markets (Lower Market Multiple)
  • Jobs Report Preview

Futures are modestly lower following a steep global sell-off as markets digest Thursday’s tariff threat and the “less dovish than hoped for” Fed, ahead of the jobs report.

Chinese authorities threated retaliation should the tariffs go into effect on September 1st, further escalating trade tensions, although no specifics were given.

Economically, Euro Zone retail sales beat estimates, although revisions were negative so it wasn’t a strong beat.

Today the big event is the Employment Situation Report, and expectations are as follows:  Jobs: 156K, UE Rate: 3.6%, Wages: 0.2%).  The last thing this market needs at this point is a “Too Hot” number that reduces expected Fed rate cuts, or a “Too Cold” number that increases worries about economic growth.  So, from a stock standpoint, the best case in a jobs number between 150k-200k (the higher the better) with tame wage growth and stable unemployment.  If we get that “Goldilocks” number it’ll help markets stabilize.

Tariff Preview: Good, Bad, Ugly

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What’s in Today’s Report:

  • Tariff Preview:  Good, Bad & Ugly

Futures are modestly lower following a night of mixed economic data and a somewhat negative trade headline.

The WSJ published a trade article that implied the chances of a near term U.S./China deal were declining, but also said a decision on the 200 bln in new tariffs was weeks away.

Economic data was mixed as German Industrial Production missed estimates (-1.1% vs. (E) 0.3%) while Japanese Household Spending beat (0.1% vs. (E) 1.0%).

Today focus will be on the jobs report, and the expectations are: Jobs (E: 195K), Unemployment (E: 3.8%) and Wages (E: 0.3% m/m, 2.8% y/y).  As has been the case for the last few jobs report, as long as we don’t have “3’s” across the board (300k job adds, 3% unemployment and 3.0% yoy wage gains) this report shouldn’t be too much of a headwind on stocks.

Finally, in addition to the jobs report we also have two Fed speakers, Rosengren (8:30 a.m. ET) and Mester (9:00 a.m. ET), but neither should move markets.

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