Why Markets Don't Care About Tariffs Anymore
Volume 137 - The Week Ahead
US stocks took a hit last week with SPX down 261bps after Trump threatened a 50% tariff on the EU starting June 1st if trade negotiations stalled. But in classic Trump fashion, we got the predictable walk back with headlines hitting the wires over the weekend from both Von Der Leyen and Trump:
*EU'S VON DER LEYEN SAYS SHE HAD A CALL WITH TRUMP
*TRUMP: I AGREED TO EXTEND EU 50% TARIFF DEADLINE TO JULY 9
Another threat, another retreat. The playbook remains unchanged - rattle markets with bold proclamations, then find an offramp once everyone's positioned for chaos. While the headline traders were busy getting whipsawed, the real question is what this means for risk appetite heading into a fresh week.
Despite it being a bank holiday, yesterday we got some indication from futures with ES1 +127bps and NQ +147bps - which has now put them slightly higher than they were before the original news even hit the wires.
The market's message is clear: Trump's tariff theatrics are becoming background noise. What initially appeared to be a meaningful risk-off moment on Friday has already been shrugged off.
While the broader market was getting distracted by tariff headlines, the Phase II AI names I've been highlighting continued their relentless march higher. Some standout performances last week: LEU 0.00%↑ ripped +18.3% for the week, CRWV 0.00%↑ added another +28%, CRWD 0.00%↑ hit fresh all-time highs with a solid +3.7%, and SNOW 0.00%↑ chipped in +9.3%. ICYMI, I attached the original Phase II post below.
Still holding the 5800/5900 SPX risk reversal for Friday that I put on at -1. With SPX trading around current levels and the setup looking increasingly constructive for a push toward 6K, this position is shaping up nicely.
The implied move for this short week sits just above 200bps. We've got plenty of Fed speakers scattered throughout, NVDA earnings Wednesday, GDP Thursday, then PCE & UMich Sentiment to close out Friday.
In my opinion, NVDA earnings are the main event - positioning doesn't look too stretched, but the name's been range-bound for over a year now. With the stock already up ~50% from April lows, Wednesday will tell us whether this rally has legs or if we're due for another round of consolidation. Either way, it's the catalyst that sets the tone for tech and the broader market through the back half of the week.