Trump dominated headlines this week with his tariff moves. Last weekend, a 25% tariff on Canada and Mexico went into effect, but both North American nations showed a willingness to work with Trump, leading to a delay in the implementation of the tariffs. Trump also approved a 10% tariff on Chinese goods. China, in stark contrast to Canada and Mexico, responded with its own duties on imports of multiple American products, including LNG, coal, and more. Trump on Friday said he was planning to announce “reciprocal tariffs,” where if any country puts tariffs on American goods, the U.S. will respond with “the same exact tariff.”
The earnings season continued to garner headlines, and this week saw quarterly reports from major names such as Amazon, Walt Disney, Uber, and Qualcomm. For the week, the S&P 500 slipped 0.2%, while the Nasdaq shed 0.5%. The Dow also fell 0.5%.
Future Wealth’s View
Last week, logistics firms were scrambling to adjust to Donald Trump’s new rules that threaten to upend their business delivering small parcels from Chinese sellers to American buyers. But, by the end of the week, Trump gave them a reprieve saying small packages were exempt. And on deals – the president met with US Steel’s CEO and said he’ll meet with the Japanese prime minister as Nippon Steel hopes to save its takeover bid. Stay tuned for how that plays out next week. Along with Trump, Musk has inserted himself into various federal agencies while seeking to terminate or force out tens of thousands of workers with buyouts. Many of his actions will likely not materialize.
It is the old saying “Fool me once..” that appears to have made its way into investors minds. Wall Street has stopped caring about Trump policies and focussed on what matters – corporate earnings. The real question is “How efficient are the markets?” The theory of efficient markets states that stock prices reflect all available information, so investors cannot beat broader stock market performance over the long run.
The threat of tariffs still looms, and has even gone into effect on Chinese imports, yet the market appears to have dismissed these variables and possibilities. The same can be said about the release of DeepSeek, as well as many other closely watched economic reports over the past two years. Whether it was selloffs on hot inflation readings, payroll reports, or the Fed’s delayed pivot, markets have generally recovered somewhat quickly following initial knee jerk reactions.
Markets pay attention to fundamentals. We should all do the same.