Latest news with #Rajadhyaksha
CNBC
26-06-2025
- Business
- CNBC
Market tuning out tariffs and tax bill and that will continue in second half, Barclays says
Stocks have been shaking off threats from tariffs and tax policy as of late – and they're likely to continue doing so, according to Barclays. Markets are poised to stop constantly responding to President Donald Trump's tariff policy and the "One Big Beautiful" tax bill making its way through Congress, the bank said. Instead, traders' attention will shift to macro economic data and the role of artificial intelligence in driving corporate growth. "In our view, financial markets will increasingly tune out tariff and tax headlines coming from Washington, DC," Ajay Rajadhyaksha, the bank's global chairman of research, wrote to clients in a Thursday note. "The focus should turn instead to macro data and the extent to which the AI dividend will boost corporate earnings, especially for large tech firms." .SPX YTD mountain The S & P 500 in 2025 Rajadhyaksha said tariffs should hit the world economy in the second half of the year. While investors should expect weak growth, he said the U.S. should be able to avoid a recession. The levies should push U.S. core inflation above 3%, he said, which will keep the Federal Reserve from making any changes to interest rates during its next few policy meetings. Despite the concerns around tariffs roiling trade and consumer trends, Rajadhyaksha said the world economy should get through this situation "relatively unscathed." For the tax bill, Rajadhyaksha said he does not expect it to pass Congress before the July 4 deadline. However, he said it should be approved by lawmakers before their August recess and it will likely look similar to the House's version of the bill. After a choppy run over recent months, the S & P 500 is now closing in on new all-time highs as the end of the first half of the year nears. The broad index is now up more than 4% in 2025.
Yahoo
29-05-2025
- Business
- Yahoo
The stock market cheered Trump's tariff setback. But the new reality may be more 'uncertainty.'
A US trade court decision that put at least a temporary pause on many of President Trump's wide-ranging tariffs isn't cooling Wall Street's fears over policy uncertainty. "It is not clear that this is a catalyst for a sustained new risk-on [trade]," Barclays global chairman of research Ajay Rajadhyaksha wrote in a note to clients while pointing out that lower tariffs would mean less revenue back to the US government. That could cause Trump's new tax bill to push the US deficit higher if it went into effect, exacerbating the recent rise in bond yields and potentially weighing on the equity market. The decision from the US Court of International Trade invalidates Trump's "Liberation Day" tariffs of 10% on nearly the entire world and wipes out the threat of higher tariffs on countries that fail to reach a deal during his 90-day pause on the "reciprocal" tariffs. Stock futures soared overnight on the news, with futures tied to the major indexes rising nearly 2%. But the administration has already appealed the decision. And strategists like Rajadhyaksha have pointed out that this could merely delay Trump's tariff rollout, not eliminate it. "Investors were hoping that tariff negotiations would largely be ironed out in the next couple of months, leaving the Administration free to focus far more on growth-positive policy including deregulation," Rajadhyaksha wrote. "At least optically, that entire process is now pushed back a few months." By Thursday morning, the stock market rally had already subsided. The S&P 500 (^GSPC) was up just 0.5%, with gains largely carried by Nvidia's (NVDA) 5% rally following its first quarter earnings release. Read more: What Trump's tariffs mean for the economy and your wallet Wall Street economists and strategists have been concerned not just about the tariffs themselves but also about how policy uncertainty can stunt business investment. The recent court decision hasn't solved the market's tariff uncertainty. It just added another piece to the puzzle. "We're trading a decline in the effective tariff rate (good) for a prolonged bout of policy uncertainty (bad)," Renaissance Macro head of economics Neil Dutta wrote in a note on Thursday morning. "This will weigh on business investment and hiring." He added, "At the margin, this puts some pressure back on the Fed. I'd argue this puts less emphasis on the near-term inflation data and more weight on employment." In a note to clients on Wednesday night, Goldman Sachs chief US economist Alec Phillips defined the court ruling as a "setback" for Trump's tariff plans but also said it "might not change the final outcome for most major US trading partners." Phillips explained that Trump could use different provisions to enact his reciprocal tariffs and expand his sectoral tariffs that are still in place on steel, aluminum, and autos to other sectors. "For now, we expect the Trump administration will find other ways to impose tariffs," Philips wrote. Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer. Se produjo un error al recuperar la información Inicia sesión para acceder a tu portafolio Se produjo un error al recuperar la información Se produjo un error al recuperar la información Se produjo un error al recuperar la información Se produjo un error al recuperar la información
Yahoo
29-05-2025
- Business
- Yahoo
The stock market cheered Trump's tariff setback. But the new reality may be more 'uncertainty.'
A US trade court decision that put at least a temporary pause on many of President Trump's wide-ranging tariffs isn't cooling Wall Street's fears over policy uncertainty. "It is not clear that this is a catalyst for a sustained new risk-on [trade]," Barclays global chairman of research Ajay Rajadhyaksha wrote in a note to clients while pointing out that lower tariffs would mean less revenue back to the US government. That could cause Trump's new tax bill to push the US deficit higher if it went into effect, exacerbating the recent rise in bond yields and potentially weighing on the equity market. The decision from the US Court of International Trade invalidates Trump's "Liberation Day" tariffs of 10% on nearly the entire world and wipes out the threat of higher tariffs on countries that fail to reach a deal during his 90-day pause on the "reciprocal" tariffs. Stock futures soared overnight on the news, with futures tied to the major indexes rising nearly 2%. But the administration has already appealed the decision. And strategists like Rajadhyaksha have pointed out that this could merely delay Trump's tariff rollout, not eliminate it. "Investors were hoping that tariff negotiations would largely be ironed out in the next couple of months, leaving the Administration free to focus far more on growth-positive policy including deregulation," Rajadhyaksha wrote. "At least optically, that entire process is now pushed back a few months." By Thursday morning, the stock market rally had already subsided. The S&P 500 (^GSPC) was up just 0.5%, with gains largely carried by Nvidia's (NVDA) 5% rally following its first quarter earnings release. Read more: What Trump's tariffs mean for the economy and your wallet Wall Street economists and strategists have been concerned not just about the tariffs themselves but also about how policy uncertainty can stunt business investment. The recent court decision hasn't solved the market's tariff uncertainty. It just added another piece to the puzzle. "We're trading a decline in the effective tariff rate (good) for a prolonged bout of policy uncertainty (bad)," Renaissance Macro head of economics Neil Dutta wrote in a note on Thursday morning. "This will weigh on business investment and hiring." He added, "At the margin, this puts some pressure back on the Fed. I'd argue this puts less emphasis on the near-term inflation data and more weight on employment." In a note to clients on Wednesday night, Goldman Sachs chief US economist Alec Phillips defined the court ruling as a "setback" for Trump's tariff plans but also said it "might not change the final outcome for most major US trading partners." Phillips explained that Trump could use different provisions to enact his reciprocal tariffs and expand his sectoral tariffs that are still in place on steel, aluminum, and autos to other sectors. "For now, we expect the Trump administration will find other ways to impose tariffs," Philips wrote. Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
Yahoo
29-05-2025
- Business
- Yahoo
Stock market uncertainty unresolved with court ruling on Trump tariffs
A US trade court decision that put at least a temporary pause on many of President Trump's wide-ranging tariffs isn't cooling Wall Street's fears over policy uncertainty. "It is not clear that this is a catalyst for a sustained new risk-on [trade]," Barclays global chairman of research Ajay Rajadhyaksha wrote in a note to clients while pointing out that lower tariffs would mean less revenue back to the US government. That could cause Trump's new tax bill to push the US deficit higher if it went into effect, exacerbating the recent rise in bond yields and potentially weighing on the equity market. The decision from the US Court of International Trade invalidates Trump's "Liberation Day" tariffs of 10% on nearly the entire world and wipes out the threat of higher tariffs on countries that fail to reach a deal during his 90-day pause on the "reciprocal" tariffs. Stock futures soared overnight on the news, with futures tied to the major indexes rising nearly 2%. But the administration has already appealed the decision. And strategists like Rajadhyaksha have pointed out that this could merely delay Trump's tariff rollout, not eliminate it. "Investors were hoping that tariff negotiations would largely be ironed out in the next couple of months, leaving the Administration free to focus far more on growth-positive policy including deregulation," Rajadhyaksha wrote. "At least optically, that entire process is now pushed back a few months." By Thursday morning, the stock market rally had already subsided. The S&P 500 (^GSPC) was up just 0.5%, with gains largely carried by Nvidia's (NVDA) 5% rally following its first quarter earnings release. Read more: What Trump's tariffs mean for the economy and your wallet Wall Street economists and strategists have been concerned not just about the tariffs themselves but also about how policy uncertainty can stunt business investment. The recent court decision hasn't solved the market's tariff uncertainty. It just added another piece to the puzzle. "We're trading a decline in the effective tariff rate (good) for a prolonged bout of policy uncertainty (bad)," Renaissance Macro head of economics Neil Dutta wrote in a note on Thursday morning. "This will weigh on business investment and hiring." He added, "At the margin, this puts some pressure back on the Fed. I'd argue this puts less emphasis on the near-term inflation data and more weight on employment." In a note to clients on Wednesday night, Goldman Sachs chief US economist Alec Phillips defined the court ruling as a "setback" for Trump's tariff plans but also said it "might not change the final outcome for most major US trading partners." Phillips explained that Trump could use different provisions to enact his reciprocal tariffs and expand his sectoral tariffs that are still in place on steel, aluminum, and autos to other sectors. "For now, we expect the Trump administration will find other ways to impose tariffs," Philips wrote. Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CNBC
23-05-2025
- Business
- CNBC
Why investors are calling Trump's bluff on 50% tariffs on the European Union
European stocks appear to have mostly shrugged off U.S. President Donald Trump's abrupt threat to impose a 50% tariff on European Union goods, regarding it as a high-stakes negotiating tactic rather than a policy set in stone. It's one message that could be drawn from the price action in the Stoxx Europe 600 index on Friday, which closed down 1% after initial jitters followed Trump's post on Truth Social announcing the decision. It's certainly unlike the 2.5% to 5% losses seen in the days following April 2 "Liberation Day" tariff announcements. .STOXX 5D line Despite the sharp rhetoric, many analysts believe the extreme nature of the 50% tariff threat, its potential economic fallout for the U.S. itself, and the language used by the president point towards a bluff designed to extract concessions. "We believe that this morning's social media posts about a 50% tariff on the EU are primarily a negotiating tactic," Ajay Rajadhyaksha, global chairman of research at Barclays, put bluntly in a note to clients. Rajadhyaksha noted the timing, just hours before U.S. and EU trade officials were due to speak, and the use of the word "recommending" rather than "must" as indicative. "We are guessing here – as is everyone else – but we remain of the belief that the 50% tariff on all EU goods on June 1 won't actually go ahead." However, the Barclays analyst conceded that tariffs are likely to be higher than expected when the dust settles. Rajadhyaksha had previously forecasted 14-17% average tariffs on U.S. imports. "That assumption might be too optimistic. The EU will not end up with 50%, we think, but it now seems the continent could end up with (say) 20%," he added. Andrew Kenningham, chief Europe economist at Capital Economics, echoed this sentiment. "President Trump's threat of a 50% tariff from 1st June may well turn out to be a negotiating tactic and seems very unlikely to be where tariffs settle over the long run," he said. Kenningham warned, however, that "if it were implemented it could result in a substantial fall in GDP in Germany and potentially even higher in Ireland if pharmaceuticals were included," estimating a German GDP hit of around 1.7% after three years. "At this stage, we are not inclined to change our working assumption that tariffs on the EU will ultimately settle around 10% but this underlines that there are risks and that the road to an agreement could be rocky." Tariffs may be too expensive for the U.S. The U.S. imported $606 billion in goods from the EU in 2024, running a goods trade deficit of $236 billion. A 50% tariff, if fully implemented for a year, could cost around $300 billion directly. Using the 2018 trade war with China as a framework, Barclays' Rajadhyaksha pointed out that "roughly 60% of actual tariffs are paid by the consumers of the tariffing country," implying a potential $180 billion hit to U.S. consumers. "The US arguably saw this coming in the case of China and decided that it was too high a price to pay; reciprocal tariffs on China collapsed before there was too much damage done," he explained. "We think it unlikely that the US will be willing to risk a repeat – and this time with its largest trading partner." Risk of retaliation And unlike America's trading relationship with China, the U.S. maintains a large services surplus with the EU, amounting to 109 billion euros ($123.5 billion) in 2023. Proceeding with a 50% import tax rate risks retaliatory measures from the European Union, according to Inga Fechner, senior economist at ING. "Despite the aggressive rhetoric, Trump's tariff threats are often a prelude to negotiation as with China's weekend deal at the beginning of May (which in fact was more a delay than a real deal)," Fechner pointed out. "While the EU is slower to act, it has prepared a couple of retaliatory tariff measures which are currently scheduled to enter into force on 14 July," she said. "And if talks truly collapse, expect the EU to reach for its heaviest artillery, such as tighter regulations on US tech firms, delaying licenses or restricting public procurement access and limiting IP rights and investment flows under the Anti-Coercion Instrument (ACI)." In the off chance that the U.S. tariffs went into effect, Fechner has forecasted a 0.6 percentage-point hit to GDP growth which would "bring the eurozone economy close to recession territory." Salomon Fiedler of Berenberg Economics also sees the move as a pressure tactic. "If actually implemented, such a tariff would result into significant hits to the EU and US economies," the economist said, adding that the inflationary effect of the tariffs would also make the U.S. central bank more likely to keep interest rates higher than needed. "Given the damage the US would do to itself with this tariff, he will probably not follow through," Fiedler added. "Still, the threat cements our view that the EU will probably not be able to negotiate away the 10% baseline tariff which Trump imposed on almost all US trade partners." Jordan Rochester, a fixed income and currency strategist at Mizuho questioned whether Trump's strategy was merely to '"escalate to de-escalate?" Rochester calculated that a 50% reciprocal tariff, excluding currently exempt items like pharma and semiconductors, would mean a "25% effective rate for the EU." He added that "markets and EU policy makers will hope this is a move by Trump to unlock trade talks and not a permanent situation."
