Battle-hardened Wall Street bulls are proving very hard to scare
ADVERTISEMENT First came the inflation angst, then the tariff crash, then the war in the Middle East. At this point, it's hard to imagine what could still rattle the investor class.
Speculative spirits were on display again this week, even as President Donald Trump escalated threats against major trading partners, including a 35% tariff on Canadian goods and a 50% levy on copper. Bitcoin surged past $118,000, bond volatility fizzled, stocks held near records and retail traders unleashed risky wagers anew.
It's a form of investor resilience, built by facing down threats and emerging stronger — where even the prospect of a renewed US-led trade conflict gets brushed aside, in favor of bullish bets across the board.
JPMorgan Chase & Co. CEO Jamie Dimon has a different word for it: complacency. But for traders sitting on fattening profits in crypto, tech, leveraged ETFs, commodities and beyond, it's feeling like vindication. 'We absolutely believe the recent bullish price action in risk assets makes sense,' said Max Kettner, chief multi-asset strategist at HSBC. 'Bear in mind this is no longer just equities but spreading across virtually all risk assets. So if anything, we'd argue investors are once again under-exposed and continue to fight the rally.'
ADVERTISEMENT Traders are getting harder to frighten even as measures that presaged past market stress climb. A global trade policy uncertainty index tracked by Bloomberg is rising, just as it did in the months before April's global market meltdown. The S&P 500 closed Friday marginally below its record. Risk premiums tracking US corporate bonds hovered around their lowest level of the year. Bitcoin exchange-traded funds continued to see inflows. Volatility receded, with a gauge of US Treasury swings hitting its lowest level in nearly 3 1/2 years as measures of stocks. Oil and gold turbulence remained subdued.
ADVERTISEMENT And yet, Trump warned this week that new and higher rates will kick in Aug. 1, unless countries negotiate better terms. The announcement of a 35% tariff on some Canadian goods came the same day the S&P 500 hit its all-time high.'The market has consistently shrugged off any issues, including tariffs, and even the brief conflict between Israel and Iran,' said Josh Kutin, head of multi-asset solutions, North America at Columbia Threadneedle Investments. 'If the market is not overall responding negatively to any of those issues, I have a hard time seeing how that happens in the near-term.'
ADVERTISEMENT Kutin says the administration's habit of backing off when markets react badly to trade policies keeps him calm — and on the lookout for tactical opportunities to add equity exposure. Indicators across several portfolios continue to flash bullish signals, he says, driven by strong momentum and relatively low volatility. And while acknowledging the current state can feel 'toppy,' he believes the rally has room to run.
The view reflects an increasingly common bet across Wall Street, known as the 'TACO' trade, for Trump Always Chickens Out. The wager is that either the administration will walk back its tariff threats, or the upshot of the offensive simply won't be enough to derail the expanding US economy. Whatever the reasoning, bullishness is prevailing.
ADVERTISEMENT Trump took to social media this week to celebrate record highs in tech and industrial stocks, as well as an unstoppable crypto runup that sent Bitcoin soaring to $118,000. That market confidence — forged in an environment that has repeatedly punished skeptics — has made some investment pros queasy.'People are getting a little bit too comfortable with this idea that Trump's always going to back down,' said David Lebovitz, the global strategist of multi-asset solutions at JPMorgan Asset Management. 'We've gone from a world where nobody knew anything to everybody knows something. It's almost like the market's going to go through this stress test where they see how far they can push it until they begin to see those cracks.'Complacency was also invoked by his boss, JPMorgan's Dimon, as stocks hit record highs amid the deluge of tariff news this week. He said a trade framework with Europe still 'needs to get done,' and that the Federal Reserve is far more likely to raise interest rates than is generally believed in markets.'The rally has gone way too far,' said Kristina Hooper, chief market strategist at Man Group. 'The tariff situation is far from resolved. It's absolutely difficult for investors to model this out, so it's easier to ignore it than think about the consequences.'Hooper advises reallocating to equity markets that offer better diversification and more attractive valuations — including Europe, the UK and even China.'I'm a sober realist,' Hooper said. 'We have valuations that are at historically high levels. And so when stocks are priced at a near perfection, it's a lot easier for disappointment to occur.'Despite concerns over potentially stretched valuations and mixed economic signals, bulls say it's a mistake to get in the way of markets rolling with this much momentum.
Kettner, for his part, believes the US exceptionalism will continue as he ratchets up HSBC's overweight, particularly to US equities. This week's erratic tariff announcements may end up being a bullish catalyst if walked back, he says. With a weaker dollar and lowered earnings expectations, the upcoming reporting season could provide further support for equities.
'We also strongly disagree with the idea of complacency,' he said. 'Equities and risk assets are well positioned to climb the wall of worries further in the coming weeks.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Hindu
9 minutes ago
- The Hindu
Why is Trump taking aim at BRICS?
The story so far: U.S. President Donald Trump's threat to impose 10% tariffs on members of the BRICS grouping that held a summit in Rio de Janeiro this week is the latest in a series of similar threats. Why is BRICS in Mr. Trump's cross-hairs? Even before he was sworn in as U.S. President for the second time, Donald Trump had made it clear that he saw the BRICS grouping as 'anti-American' and a threat to the dollar that he needed to neutralise. On November 30 last year, Mr. Trump said the U.S. would require BRICS members to commit that they would not create a new BRICS common currency, 'nor back any other currency to replace the mighty U.S. dollar', threatening 100% tariffs on them. It's a threat he has repeated several times since. Mr. Trump's irritation appears to stem from BRICS declarations in South Africa in 2023 and Russia in 2024, where members that now also include Egypt, Ethiopia, Indonesia, Iran and the UAE, discussed a BRICS Cross-Border Payments Initiative that aims to facilitate trade and investment within BRICS countries using local currencies and other mechanisms. The initiative built momentum due to the problems Western sanctions on Russia have meant for trading partners in the Global South. What has the U.S. threatened to do? Last Sunday (July 6, 2025), just as BRICS leaders gathered in Rio for the 17th BRICS summit, Mr. Trump said in a social media post that any country aligning with BRICS would face a 10% added tariff. The penalty was 'just for that one thing' of being a member, Mr. Trump said later. It is unclear why the tariff rate was dropped to a tenth from the original threat of 100%, and even whether Mr. Trump will go through with the BRICS tariffs along with other reciprocal tariffs planned for August 1. But there seems little doubt that Mr. Trump wants BRICS de-fanged. 'You can tell the (U.S.) President is (upset) every time he looks at the BRICS de-dollarisation effort…(and) Rio didn't help,' said Steve Bannon, Trump's former White House chief strategist, according to Politico magazine. Editorial | Building resilience: On the 17th Summit of BRICS emerging economies In addition, the Trump administration has slapped 50% tariffs on Brazil after accusing President Lula da Silva of a 'witch-hunt' against former Brazilian President Jair Bolsonaro, who faces charges of attempted coup. It has also imposed 30% tariffs on South Africa after accusing it of unequal trade, as well as expressing concerns over the treatment of Afrikaners (White South Africans). Republican Senators close to Mr. Trump also plan to bring a bill called the Sanctioning Russia Act of 2025 that seeks to place 500% tariffs on imports of oil and sanctioned Russian products, which would hurt Russia, as well as India and China, its two biggest importers. Are Mr. Trump's concerns valid? Mr. Trump's concerns about de-dollarisation have been denied by practically every BRICS member. The South African Ministry of Foreign Affairs issued a detailed statement explaining why the BRICS attempt to use national currencies within the grouping is not the same as replacing the dollar as the global standard. While anti-U.S. rhetoric of some BRICS leaders has been harsh, the wording of the BRICS Rio declaration 2025 issued this week does not directly challenge the U.S. or the dollar. In the operative Paragraph 50, the leaders said they resolved to task ministers of finance and central bank governors 'to continue the discussion on the BRICS Cross-Border Payments Initiative and acknowledge the progress made by the BRICS Payment Task Force (BPTF) in identifying possible pathways to support the continuation of discussions on the potential for greater interoperability of BRICS payment systems.' Paragraph 13 expressed 'serious concerns' over the rise of unilateral tariff and non-tariff measures but didn't name the U.S. Where does India stand? The Modi government, hopeful of clinching a Free Trade Agreement with the U.S., has strenuously objected to Mr. Trump's categorisation of the BRICS as 'anti-American'. Also read: India will give a 'new form' to BRICS grouping in 2026: PM Modi In a parliamentary response on December 2, 2024, the MoS (Finance) Pankaj Chaudhury made it clear that the U.S. allegations referred to a report prepared by Russia during its chairmanship of BRICS, where it had spoken of 'possible alternatives relating to cross-border payments' and 'leveraging existing technology to find an alternative currency'. He added that the report was only 'taken note of' by other BRICS members, not adopted. In March 2025, External Affairs Minister S. Jaishankar was more categorical, saying there is no Indian policy to replace the dollar. He conceded, however, that BRICS members had differences, and there was no unified position of the grouping on the issue.
Deccan Herald
30 minutes ago
- Deccan Herald
Rising South: An order rebalanced
US President Donald Trump has, in his inimitable style, once again taken to social media to issue a threat to the BRICS countries huddled together to devise strategies against the US tariff attacks. 'Any country aligning with the anti-American policies of BRICS will be charged an ADDITIONAL 10 per cent tariff,' he said, hours after the BRICS finance ministers issued a statement that criticised the tariffs, calling them a threat to the global virtually to the BRICS gathering, Russian President Putin reiterated his suggestion of greater financial independence from the US dollar in international trade settlements. Trump is understandably annoyed at the revival of this narrative of criticising Trump's use of tariffs as a coercive policy to force countries to enter bilateral trade deals that favour the US, the BRICS summit proposed a series of reforms in the International Monetary Fund (IMF) and its currency valuation methods. According to the BRICS economic advocacy group, in the current economic uncertainty, the IMF needs to embrace urgent reforms in the quota system to increase the representation and voting power of developing countries, as the present system promotes dominance of advanced economies. The BRICS nations are also calling for an end to the 'gentlemen's agreement' which has historically favoured European countries in the IMF's leadership financial institutions, especially the two Bretton Woods institutions – the IMF and the World Bank (WB) – did play a significant role in the international financial architecture for some years. But they could not prevent the financial crisis nor bail the developed economies out of the crisis, much of which was their own creation. It has also been noted that their working and decision-making process continued to be greatly influenced by the developed 'North' and less relevant to the developing or underdeveloped 'South'. The last two or three decades have seen the global growth engine shift from the North to the South, which now houses three of the world's largest economies. Meanwhile, groupings such as BIMSTEC, BRICS, ASEAN, and SCO have added tremendous muscle to the emerging South-South countries add up to represent about 49% of the world's population, 39% of the global GDP, and 23% of international trade. In a changing geopolitical and geo-economic setting, when the US under Trump's administration is looking to withdraw from global institutions and looking more inwards in its quest for Making America Great Again (MAGA), the post-World War II economic institutions cannot expect to be relevant and succeed in their original objectives by remaining within a seven decades-old organisational structure. They must either reinvent themselves or face the possibility of paling into BRICS financial institutions and efforts under the South-South Cooperation (SSC) are assured signs of a collective leadership that is aligned with a multilateral world order – these are realities of the present era. The rise of the South, the emerging economies, and India's leadership role in SSC promise an alternative to archaic perceptions that are far removed from ground realities, and to the North and its tired leadership. Blocking the progress of BRICS will serve no real purpose for America or the attempts to create roadblocks for BRICS are born out of apprehensions of a challenge to the America-led world order, which is creaking under its own weight of contradictions. The independent non-dollar trade settlement system, which the BRICS is considering, may not be a reality soon, but it is born out of necessity, from the dollar's failure to meet the challenges and needs of the present era. The bilateral and multilateral economic, security, and strategic arrangements under the BRICS agenda need not necessarily hurt the interests of the US or any other grouping unless there is an established clash of interests, which in a highly globalised world would be detrimental for everyone play an important role in understanding the geopolitical and geo-economic dynamics of any given time. The decisions, economic or otherwise, the interpretations of meetings and events, and policy formulations made on flawed perceptions will lead to detrimental results. America and the rest of the Western world have to learn from past errors of judgement and look at the emerging institutions of the South, such as BRICS, from a new perspective. The shift is real – looking away cannot alter that reality.
India Gazette
33 minutes ago
- India Gazette
India seeks WTO nod for retaliatory tariffs on US
NEW DELHI, India: India has submitted a revised proposal to the World Trade Organization (WTO) in Geneva to implement retaliatory tariffs on the United States. This action comes in response to the U.S. government's decision to double tariffs on imports of steel and aluminum. Reports indicate that India submitted the updated proposal to WTO members at its own request. On March 12, 2025, the U.S. increased import duties on aluminum, steel, and related goods to 25 percent, which the Trump administration then raised to 50 percent on June 3. India's response aligns with WTO regulations that permit member countries to suspend concessions when affected by safeguard measures. According to the revised proposal, India's planned suspension of trade concessions could impact U.S. goods worth approximately US$3.82 billion—a substantial increase from the earlier estimate of $1.91 billion in May. This figure reflects the estimated value of Indian exports affected by the U.S. measures, which total around $7.6 billion. India has indicated that it may impose higher tariffs on select U.S. products. However, the final tariff rates and product lists remain flexible, allowing India to adjust depending on the escalating impact of the U.S.'s trade actions. The dispute stems from the U.S.'s initial move in 2018, when it imposed a 25 percent tariff on certain steel products and 10 percent on aluminum, citing national security concerns. In response, India raised tariffs in 2019 on 28 U.S. products, including almonds and walnuts, and also filed a complaint with the WTO. This current development comes amid ongoing negotiations for a Bilateral Trade Agreement (BTA) between the two countries. An Indian delegation is scheduled to visit Washington next week to continue trade discussions.
