Investors’ risky bet: they can shrug off the trade war

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After a month of tumult, investors in American stocks are making peace with the trade war. The S&P 500 index is down by just 2.4% since Donald Trump issued his “Liberation Day” proclamation. Stocks are still about 10% below their all-time high in February, when investors expected the administration to do little except cut regulations and taxes. But they are not pricing in a recession, let alone a trade catastrophe. Analysts expect annual earnings growth of 12%; stocks are almost where they were before Mr Trump was elected.