Good morning. Is it beginning? Sorry to be vague with my initial sentence, but what I am referring to is what seems like the start of effects related to the “Trump Tariffs” … and early indications are the reactions aren’t pretty and could get a bit worse. Arrivals into U.S. ports have slowed. Now the question is how long this will last and to what degree U.S. manufacturers can pick up the slack. A meeting today between newly-elected Canadian Prime Minister Carney and President Trump can help … or hurt … as the relationship between the U.S. and our largest trading partner has become strained (to put it mildly) in recent weeks and … in fact … might have directly led to Carney’s election victory. It seems Canada did not “bend” (as some might have expected) and, instead, started to seek replacement economic partners and realized a high degree of “nationalism” … as consumers there shun both U.S. products and U.S. travel. Yep, it’s a mess … but both countries hope to re-discover the close friendship and partnership enjoyed between them for so many years. But it is not only Canada we worry about … as items from China also are being hit hard with tariffs to the point where some protests are happening in China … as factory workers are suddenly finding no work available … as China looks for other … more reliable … trading partners. Still, a shortage (empty shelves) might soon be seen here. Treasury Bessent told Fox News “we have some great retailers. I assume they’ve pre-ordered.” Of course, the problem here is two-fold … with smaller retailers not having the same ability of funds or contacts … to allow for preordering … and even for orders placed “pre-tariff” the arrival date here is when the extra charge hits. Back to today’s session. Stocks opened lower as the Fed holds its first day of meetings … with the “decision” to be announced tomorrow afternoon. While the President has continued to call for a rate cut, consensus is the Fed will wait another month in the face of corporate earnings that seem fine (for now), and a labor market that is holding up … for even as inflation has come down and first quarter GDP was surprisingly negative … the group might take another 5 weeks to get a better assessment (which would allow for truer reports on tariff consequences). And it seems as if many are expecting rates to eventually come down … as there was a report out this morning indicating an upsurge in “adjustable-rate mortgages.” Note I might not be writing for the next few days … though I will try … as I am leaving tonight for a “golf trip” to Georgia with some very dear friends (so dear, in fact, that they don’t laugh at my high score). And yes, it might rain but our backup plan involves alcohol and board games. One of my friends was a well-known Scrabble Champion for which … … I learned long ago that trying to beat his score is always few tile. Have a great day, Joseph G. Witthohn, CFA Have any questions? Please contact info@teamemerald.com
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