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Wall Street waits for the big tariff announcements on Wednesday. (0:18) Tariff cheat sheet. (2?17) Musk’s xAI acquires Musk’s X. (4:29)
The following is an abridged transcript:
It’s not often that something can dwarf the jobs report on Wall Street, but the administration’s global tariff announcements on Wednesday will almost certainly drive direction.
“Tariff Tuesday” would’ve had a better ring to it, but the fact that Tuesday is also April Fool’s Day probably had something with White House planning. For his part, President Trump is calling Wednesday “Liberation Day.”
But “liberation” rhymes with “stagflation,” the other word on the lips of traders.
Nomura strategist Charlie McElligott says in “light of recent shorter-term Inflation data, we are too seeing a local ‘Stagflation’ theme…as the diceyness of Trump’s ‘Phase 1’ growth negative policy mix risks pulling sentiment/consumer into an even more precarious place.”
Pepperstone’s Quasar Elizundia says: “The combination of inflationary pressures, economic slowdown, and rising trade tensions creates a challenging environment for equities. Overall, current conditions point toward a concerning scenario with signs of stagflation: low economic growth coupled with persistent inflation and a rapidly deteriorating economic sentiment.”
So, what can investors expect on Wednesday? The experts agree: who knows?
Wells Fargo economists say: “Even as next week may bring some more answers around coming tariffs, trade-related uncertainty will likely persist as these policies take time to be enacted, are negotiated and potentially even scaled back. It will also take time to see how tariffs dent growth and drive inflation, as uncertainty is causing most businesses to sit and await clarification.”
“This was evident in fresh durable goods data this week, which showed a stable but hesitant trend in demand amid low intentions for new capital investment among businesses,” they added.
McElligott says: “April 2nd is now being viewed by a lot of folks I’m speaking with as ‘The End of Beginning,’ as this only then kicks-off a daisy chain of Retaliatory Tariff escalations OR, in the opposite direction, potential Concessions … plus of course this then too ‘starts the clock’ on the inevitable ‘Growth Drag’ off the back Global Trade and Consumer ‘Sticker Shock’- implications.”
Want a cheat sheet? ING has you covered that will sub in for the Wall Street Research Corner.
The key 7 questions and answers (condensed) are:
- What tariffs will get imposed on 2 April? Reciprocal tariffs (ARE) hideously complicated to do in practice; remember every country charges thousands of different tariffs. It gets more complicated still when you throw regulatory barriers and most controversially of all, VAT.”
- Will these tariffs be long-lasting? These “reciprocal tariffs could be much longer-lasting than the on-and-off Canada and Mexico measures we’ve seen so far,” but for “all the tough talk, stock market weakness still looks like one of the more obvious trigger points for tariff de-escalation.”
- What’s priced into financial markets? “Higher inflation and weaker growth are opposing forces on yields. But our base case is that US long-end yields should go higher as the year wears on.”
- Can Europe do a deal with President Trump? Diplomatic “relations are considerably worse than in his first term. LNG and defense procurement can help, but the focus on VAT is a real nightmare for Europe.”
- Will tariffs pay for US tax cuts? “Creating genuinely new tax breaks, even if (still a big if) DOGE succeeds in cutting spending significantly, would be hard to reconcile with ambitions to lower America’s 6% fiscal deficit down to 3%.”
- How much will US inflation rise? “Passed on in full, a blanket 25% average tariff would lift the price level by more than four percentage points … Fed officials are clearly wary. Friday’s sticky core inflation data only adds to the stagflationary narrative.”
- How damaging is all of this for the U.S. economy? “Weak payrolls would feed the narrative in markets that Trump’s policy ‘negatives’ are increasingly outweighing the potential positives from tax cuts or deregulation.”The consensus is for payrolls to have risen by 145,000 in March with the unemployment rate sticking at 4.1%.a
On the earnings calendar:
Loar Holdings (LOAR), PVH (PVH), Progress Software (PRGS) and TechTarget (TTGT) report Monday.
UniFirst (UNF), Penguin Solutions (PENG) and RH (RH) weigh in on Wednesday.
On Thursday, Conagra Brands (CAG), Acuity Brands (AYI) and Lamb Weston (LW) issue numbers.
In the news this weekend, Elon Musk disclosed late on Friday that his generative artificial intelligence startup xAI has acquired his social network X in an all-stock deal.
The combined deal values xAI at $80B and X at $33B, or $45B in equity minus $12B in debt, Musk added.
Musk, who also owns X, acquired the social network (when it was known as Twitter) in October 2022 for $44B. The company was reportedly in talks last month to raise money at the same $44B valuation.
And a federal judge on Friday blocked the Trump administration from effectively shutting down the Consumer Finance Protection Bureau.
U.S. District Judge Amy Berman Jackson issued a preliminary injunction to preserve the existence of the regulator while she decides on the merits of the lawsuit intended to preserve the bureau.
Without an order from the court, Jackson ruled, the administration would quickly try to shut down the CFBP, which was created by Congress in the aftermath of the 2008 financial crisis.
And for income investors, Deere (DE) and Nucor (NUE) go ex-dividend on Monday. Deere pays out on May 8 and Nucor pays out on May 12.
Cisco (CSCO) goes ex-dividend on Thursday with a payout date of April 3.
American Express (AXP) goes ex-dividend on Friday, paying out on May 9.