Nearing the end of the “headline” phase and moving on to the “impact” phase. Think about what 10%/25%/50% should have on growth/inflation and especially earnings over the next 12m vs what’s currently priced in.

Keeps amazing me how so many argue trump caved. Great example of higher prices driving a bullish narrative. Yes trump softened his rhetoric. But he caved on very little. The effective tariff rate has barely budged since the 90 day pause, and “deals” are making that clear.

A reminder- bankruptcies/defaults lag in a cycle. First spreads widen, then the economy weakens, then spreads blowout and co’s lose access to capital, then they default. As Bill’s chart shows, bankruptcies spiked in 2009/10 near the end of the recession, after spreads had peaked.

Here is my framework. Tell me what I’m missing. The details of the framework don’t matter. If the tariffs are paused that’s bullish. If the tariffs are cut to 54% or higher that’s bearish. If the tariffs are cut to 34% it’s bullish for a few days then a fade.

But how much really changed? Before last week consensus was probably 10% country tariffs/ 25% key sectors/ ~50% China. And we now have 10/25/30. Yes uncertainty is down. But I think this is mainly a case of markets tank -> economists bearish. Markets rip -> economists bullish.

I believe GS recently put out a 1% annual real return for the SPX over the next 10yrs given starting valuations. Just one forecast, and they may be too pessimistic. But long-term TIPS now pay 2.75% real. For retirees who live off the income on their assets, seems like a gift.

Which of the following will have the highest total return over the next 12 months:

Worth a quick read