Trump Is Proving Economic Predictions Wrong as Tariff Plan Boosts Economy
Many so-called economists predicted Trump would slap tariffs across the board but the reality is generating economic positives.
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Neither inflationary pressure nor fear of tariffs could slow the market down on Thursday. It was a solid day of gains, with the S&P 500 jumping 1%, the Magnificent Seven gaining 1.8%, and the Russell 2000 IWM moving up 1.1%. Most notably, breadth was 7,500 gainers to 2,100 losers, and new 12-month highs expanded to 550 names.
The most positive development of the day was that President Trump is moving incrementally with reciprocal tariffs. They may go into effect on April 1, and he is giving other countries plenty of time to reduce their tariffs. Trump is forcing other leaders to negotiate with themselves.
Many so-called economists predicted that Trump was going to just slap tariffs on everyone across the board and create higher prices and inflation. That isn’t even close to what is actually occurring, and so far, the economic fallout is quite positive.
The market ignored hot inflation news for the second day in a row. On Wednesday, it was CPI, and on Thursday, it was PPI. The market is taking it in stride primarily because it is so optimistic about what the Trump administration is doing. The DOGE attack on spending is outraging the left, but there is the potential for $1 trillion or more in savings. Tariffs are motivating many people to move in the right direction, and the animal spirits are alive and well.
One big factor that is helping is that there is a very high level of skepticism, and bearishness is at the highest level in the past year. Those folks are not well positioned for more upside. They have some good reasons for their caution, but the pain of being left out on a day like this pushes them to put some money into their work.
There is some more economic news on Friday morning, including the retail report, but then there is a three-day weekend. We should see some positioning moves to wrap up the week.
It continues to be a tricky market to trade but a rising tide lifts most boats.
Have a good evening. I’ll see you tomorrow.
At the time of publication, DePorre had no positions in any securities mentioned.
