Treasury Secretary Bessent Rides to the Rescue
While it is important not to be too optimistic, the good news is that a cap on tariffs has been set. Here's my best advice for investors right now.
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The market has been in a panic over tariffs primarily because of the refusal by Secretary of Commerce Howard Lutnick and White House trade advisor Peter Navarro to state that there would be negotiations. Investors were concerned that this hardline would pave the way to stagflation.
It is being reported that Secretary of Treasury Scott Bessent flew to Florida on Sunday to encourage President Trump to spend more time messaging about the potential of negotiating for more favorable trade deals or risk hurting the stock market further.
On Monday, Bessent emerged as the administration spokesman with a more balanced view. He stated, "There are 50, 60, maybe almost 70 countries now who have approached us." President Trump "gave himself maximum negotiating leverage — and just when he has achieved the maximum leverage, he's willing to start talking."
Bessent is immediately starting negotiations with Japan and indicated that he expects to be very busy in the next few months negotiating with countries around the world. China is the only country that is retaliating at this point and has already indicated that its central bank will do what it can to provide support if a trade war takes place. Many other countries have already indicated their willingness to cut tariffs to zero mutually, but Lutnick and Navarro have indicated that may not be enough.
The good news is that a cap on tariffs has been set, and now the hard work of making deals and reducing the tariff burden has begun. The S&P 500 is indicated to be about 1.3% higher in the early going Tuesday and will be watched closely at around 7.10 am ET when Secretary Bessent appears on CNBC.
Technically, there is a good chance that support can be built after a washout on Monday morning. Short-sellers will likely be particularly wary after the way the market exploded on fake news of a tariff delay. That action illustrates how aggressive buyers will be on some good news.
It is important not to be too optimistic at this juncture as there are still many hurdles with tariffs, as well as concerns about the growing oddss of a recession and the danger of stagflation.
My best advice is to focus on the price action and how it reacts to headlines. It is very important that a new area of support is built and that there are underlying buyers on pullbacks. I plan to add some exposure to select stocks on Tuesday.
At the time of publication, Rev Shark had no positions in any securities mentioned.
