We can easily do a 50 bps 'make-up cut' without disrupting anything: Evenflow Macro's Marc Sumerlin
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Forbes
3 hours ago
- Forbes
Where Is The Inflation We Feared From Tariffs?
Analysts predicted that the tariffs imposed by the Trump administration on imported goods would trigger a surge in inflation. Given the U.S. imports a lot of goods from coffee to cars, this seemed a reasonable assumption. This week's CPI report showed a modest uptick in the Core number, which excludes volatile food and energy categories. On one hand, at 3.1%, it's the highest reading since February and above any level seen in the 25 pre-pandemic years between 1995 and 2021, and it's still not close to the Fed's 2% target. But this is hardly runaway inflation. The subsequent PPI report sparked slightly more concern coming higher than expected, but it was growing at even higher annual percentage changes last December through February, well before the tariffs. So, are tariffs as bad as analysts first feared? The answer: not quite, and not yet. But this may be because tariffs are nowhere close to the very high levels that make headlines. The Effective Tariff Rate Tells The Story Tariffs actually paid by U.S. importers are far lower than the headline rates set by the administration. In June, U.S. Customs collected $23.6 billion in duties on $258 billion in imports for consumption (which excludes imported goods still in warehouses). This works out to an effective tariff rate of about 9%. This is higher than the 2.3% rate from a year ago but still well below the official rates set for any country. Goods from China, for example, have a current rate of 30%, Mexico 25% and Canada 35% - the nominal rates at the time of this writing for the U.S. main trading partners. This may reflect the fact that some goods are exempt, such as USMCA-compliant goods and certain steel products and auto parts. Timing and Inventory Strategies More importantly, many importers are absorbing the costs of tariffs rather than passing them on to consumers—at least for now. That may not last long, and ultimately the public will bear the cost. In addition, some importers stockpiled goods ahead of tariff implementation, leading to a visible spike and subsequent drop in imports before and after 'Liberation Day.' And yet others may be holding off on imports until negotiations reach a definitive outcome, because the process has certainly been halting and confusing. These three factors don't affect the effective tariff rate, but they do influence when and how costs show up in consumer prices. The Debate: One-Time Shock or Persistent Inflation? Economists also disagree on whether tariffs fuel ongoing inflation or simply cause a one-time price jump. James Bullard, former St. Louis Fed president and another name in the growing list of possible candidates to succeed Fed chair Jerome Powell, favors the one-time shock view. If a $100 import now costs $120 due to tariffs, prices have jumped, but they're not rising continuously. But, if wages don't rise to match those jumps, consumer spending could fall and slow the economy. This, incidentally, could lead to more persistent inflation if demand for higher wages (to keep up with the higher costs) drives up the cost of labor. This is how wage-price spirals start and represent a big headache for the Fed. Bottom Line It's too soon to declare that tariffs won't cause inflation. The current effective tariff rate is still low, and that suggests that more price pressures lies ahead. Pre-tariff inventories will eventually run out, and companies absorbing costs are unlikely to keep doing so. And if tariffs only cause a one-time jump in prices, weaker purchasing power could slow the economy. For now, stock markets remain optimistic, buoyed by modest inflation and a still-strong economy. But history shows that such optimism can fade quickly. It would not be the first time that investors find themselves disappointed.
CNBC
4 hours ago
- CNBC
Friday's big stock stories: What's likely to move the market in the next trading session
Stocks @ Night is a daily newsletter delivered after hours, giving you a first look at tomorrow and last look at today. Sign up for free to receive it directly in your inbox. Here's what CNBC's producers were watching in Thursday's session and what's on the radar for Friday. UnitedHealth Group Some big names have piled into this health-care giant over the last several weeks, according to 13F filings compiled and reported on this evening by CNBC's Leslie Picker. She will have a lot more on "WorldWide Exchange" and "Squawk Box" Friday morning. David Tepper's Appaloosa Management bought the stock. So did Warren Buffett 's Berkshire Hathaway . And Scion Asset Management's Michael Burry , of "Big Short" fame, bought call options, hoping the stock is going higher. Shares are up 10% after hours. UnitedHealth has had a rough go in the market, and of course, outside of the market. Shares are down 46% so far year to date. The stock is 57% from the November 2024 high. It is by far the worst performing stock in the Dow 30 in 2025 and in the 12-month period. Top-rated analyst Lisa Gill of JP Morgan will weigh in with her first thoughts on the stock tomorrow morning with Frank Holland on "Worldwide Exchange," which starts at 5 a.m. ET. Gordon Gekko used to like to say, "money never sleeps pal." UNH YTD mountain UnitedHealth Group shares year to date Intel Bloomberg is reporting that the White House is considering making a direct investment in the stock. Intel was up 7% today on the news, it is up an additional 3% after hours. Intel is up 19% so far in 2025 but the stock is about 13% from its February high. This was a $68 stock back in 2021. It's now trading around $24. Full coverage continues tomorrow morning. INTC YTD mountain Intel shares year to date. Housing in the USA Noted analyst Ivy Zelman will join "Squawk Box" with Joe Kernen and Andrew Ross Sorkin in the 8 a.m. hour. There's a ton of issues including a shortage of homes to buy, high prices, a lack of places to move to — all of which ties up the market. Mortgage rates and local rules are also issues the builders say are holding them back. Zelman will go through the list with us and look at the stocks. The SPDR S & P Homebuilders ETF (XHB) is 10% from its November high. It is up 11.5% so far in August. A lot of the big names are up big in August. Hovnanian is up 31% in August, but it's still 35% from last summer's high. Lennar is up 16% in August, and it's 30% from its September 2024 high. Pultegroup is up almost 14% in August, and is 14% from its October high. Taylor Morris Home is also up about 15% in August, and is 10% from the November high. Toll Brothers is up 11% in August, and is 23% from the November high. NVR is up more than 8% in August, putting it 18% from its October high. Uranium and Rare Minerals As President Donald Trump heads to Alaska to meet with Russian President Vladimir Putin, the Global X Uranium ETF (URA) is up 39% in three months. The ETF is 7.5% from its mid-July high. It is up about 80% since Russia invaded Ukraine in 2022. The VanEck Rare Earth and Strategic Metals ETF (REMX) is up 46% in 2025. The Sprott Critical Materials ETF (SETM) is up 40% so far this year. Full coverage of the president's mission begins on "Squawk Box" in our 6 a.m. hour.
Yahoo
5 hours ago
- Yahoo
Stock market today: Dow, S&P 500, Nasdaq futures waver as investors await retail data after rate-cut bets cool
US stock futures traded mixed as Wall Street tempered its rate-cut hopes and awaited July's retail sales report. Futures attached to the Dow Jones Industrial Average (YM=F) rose around 0.3%. Futures attached to the benchmark S&P 500 (ES=F) flatlined. Futures attached to the tech-heavy Nasdaq 100 (NQ=F) fell about 0.2%. Stocks wobbled on Thursday, ending a two-day rally sparked by investor confidence that an interest rate cut in September was nearly certain. Doubts about a significant cut at the Fed's next policy meeting crept in after July's Producer Price Index (PPI) came in hotter than expected. After the bell, Intel (INTC) shares jumped on news that the US government is considering taking a stake in the company. Trump met with Intel's CEO on Monday after calling on him to resign the previous week. UnitedHealth (UNH) stock also soared after a regulatory filing showed Warren Buffett's Berkshire Hathaway bought 5 million shares in the company. Finally, Applied Materials (AMAT) dove after its earnings report included a downbeat forecast that spooked investors. On Friday, Wall Street will be watching the release of retail sales data. The results will offer clues as to whether Trump's tariffs are impacting consumer spending habits.
