Fed is ‘inherently inside the swamp and is political,' says Jefferies' David Zervos
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Yahoo
14 minutes ago
- Yahoo
Trump's tariffs and the tax bill are splitting the stock market. Here's the playbook for investors, according to Morgan Stanley.
Trump's policies are splitting the stock market, Morgan Stanley says. The bank said it believes Trump's tariffs and tax bill are splitting parts of the market in half. It says there are a handful of things for investors to look for when deciding where to put their money. President Donald Trump's policies are splitting the market into distinct camps, Morgan Stanley says. Lisa Shalett, the chief investment officer of the bank's wealth management arm, pointed to the effects of Trump's tax bill and his sweeping tariffs in a recent podcast. "Now, as the impacts of the tax reform bill and global tariff implementation begin to roll through the economy, we sense that yet another series of great divides are opening up," Shalett said. Here are the splits that are emerging: 1. Consumer-facing businesses vs. B2B businesses Businesses that sell directly to consumers are more impacted by any potential weakening fo household balance sheets, a risk that business-to-business firms are less worried about. Market pros believe that tariffs could weaken consumers' spending power, as companie can pass along the cost of import duties by raising prices. Shalett added that those pressures are coming at an already critical time for consumers, pointing out that more Americans are falling behind on credit card and auto loan payments. The job market is also flashing signs of weakness, with payrolls in May and June seeing a large downward revision, while job growth for the month of July was below expectations. A weaker labor market often leads to a pullback in consumer spending. 2. Multinational exporters vs. importers Multinational exporters outside of the consumer space are facing "fewer external barriers" to sending products abroad, Shalett said, suggesting they were more shielded from the trade war. Those firms are also benefitting from a weaker US dollar, which is making their products more attractive to foreign customers, Shalett added. Multinational firms are also typically more capital- and research & development-intensive, she said. That also positions them to benefit more from the tax benefits outlined in the "One Big Beautiful Bill," which creates favorable tax treatment for domestic R&D costs. "So, with this new structural division emerging, global stock selection is more important now than ever," Shalett said. Here are some characteristics of the companies investors should be leaning toward, in Shalett's view: Multinational non-consumer exporters. Tailwinds for these companies should continue, Shalett said. Select tech, financials, industrials, energy, and healthcare stocks. Stocks in these areas could benefit from some of the policies included in Trump's tax bill, which could lead to upside surprises in earnings and cash flow. Stocks that aren't "overhyped." International stocks, commodities, and energy infrastructure. Companies in these areas could help an investor diversify their portfolio, she added. Sentiment has shifted slightly more bearish in the last week, with Trump doubling down on tariff threats and markets digesting weaker-than-expected economic data. Goldman Sachs, Evercore ISI, Stifel, Pimco, and HSBC are among the firms that have recently flagged the risk of a stock correction or advised investors to rethink their portfolio allocations. Read the original article on Business Insider Sign in to access your portfolio
The Hill
15 minutes ago
- The Hill
Rubio suggests Russia, Ukraine not ready for Trump meeting
Secretary of State Marco Rubio suggested Wednesday that Russia and Ukraine are not ready for a meeting with President Trump as the war between the two countries rages on. 'I think what we have is a better understanding of the conditions under which Russia would be prepared to end the war,' Rubio told Fox Business Network's Larry Kudlow on his show. 'We now have to compare that to what the Ukrainians and our European allies, but the Ukrainians primarily, of course, are willing to accept and what you try to see is, how far can you get these two positions closer? How can you get these two positions closer to each other?' 'If we can get what the Ukrainians will accept and what the Russians will accept close enough, then I think there's the opportunity for the president to have a meeting that includes both Putin and Zelensky to try to close this thing out,' he added. 'So, we've got to get closer in that regard.' Trump has recently weighed a meeting in upcoming weeks with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelensky amid an effort to end the war between the two countries. The president brought up the idea of meeting with the two leaders in a Wednesday call with European leaders, a source confirmed to The Hill. White House press secretary Karoline Leavitt also said Russia had shown interest in a Trump meeting. 'As President Trump said earlier today on TRUTH Social, great progress was made during Special Envoy Witkoff's meeting with President Putin,' Leavitt said in a statement. 'The Russians expressed their desire to meet with President Trump, and the President is open to meeting with both President Putin and President Zelensky. President Trump wants this brutal war to end,' she added.
The Hill
15 minutes ago
- The Hill
Pritzker says ‘no way' FBI can arrest Texas lawmakers in Illinois
Illinois Gov. JB Pritzker (D) in a Wednesday interview said he would block any efforts to arrest Democratic lawmakers in the state who fled Texas to block a GOP effort to pick up five additional House seats in the midterm elections. 'Our state troopers protect everybody in Illinois and anybody who's here in Illinois,' Pritzker said during an appearance on ' News Not Noise ' with Jessica Yellin. 'And so, whether it's federal agents coming to Illinois or state rangers from Texas, if you haven't broken federal law, you're basically unwelcome and there's no way that our state legislators here — the Texas state legislators — can be arrested,' he added. Sen. John Cornyn (R-Texas) urged FBI Director Kash Patel in a letter this week to help return Democrats to the Lone Star State. President Trump on Tuesday said the federal agency 'may have to' get involved, later adding the GOP was 'entitled' to additional House seats. 'We should have many more seats in California. It's all gerrymandered. And we have an opportunity in Texas to pick up five seats. We have a really good governor, and we have good people in Texas,' the president said during an interview Tuesday on CNBC's 'Squawk Box.' 'And I won Texas. I got the highest vote in the history of Texas, as you probably know, and we are entitled to five more seats,' he added. But Pritzker argued Wednesday that any efforts to force the return of Democratic lawmakers are illegal. 'Look, we follow the law and the law is what I just laid it out to be. But, as you know, Donald Trump does not follow the law. Indeed, he's a convicted felon,' Pritzker told Yellin. 'And in Texas, they are also not following the law. They are thwarting the Constitution with the Voting Rights Act and making threats that they can't carry out. John Cornyn, of course, is running against Ken Paxton for his seat in the U.S. Senate; and so they're fighting, bickering over who can be tougher on this topic,' he added.
