Nothing happened today in the financial markets. The prices of stocks, bonds, the dollar, and oil all were relatively flat. On the other hand, there was more Trump Tariff Turmoil (TTT). But the markets watched it all with as much interest as watching reruns on TV. President Donald Trump huffed and puffed again. The financial markets' reaction was ho-hum.
Trump today announced plans to impose a 50% tariff on copper imports and a 20% duty on pharmaceuticals. He also warned there would be "no extensions" to his new date for when tariffs would take effect, August 1, having pushed the effective date out from July 9 on Monday. Ho-hum.
For now, stock investors are tuning out the latest episode of TTT. They may be doing so because they expect the upcoming Q2 earnings reports to be full of upside surprises, just as Q1 earnings reports were notwithstanding TTT. Q1's S&P 500 earnings rose 11.5% y/y, almost twice as fast as the consensus of industry analysts' estimates just before companies reported their results—creating an upswing, or “earnings hook,” in the data series line (chart).
The consensus growth rate for Q2 earnings was cut from 8.5% y/y at the start of the year to 3.7% currently. That should be easy to beat. We expect another earnings hook, with actual earnings up 7.6%.
