Latest news with #StrategasSecurities
Yahoo
a day ago
- Business
- Yahoo
What Trump tariff revenues mean for the US deficit
Strategas Securities managing director of policy research Jeannette Lowe joins the Morning Brief team for a conversation on the long-term view on revenue from President Trump's tariffs and what it could mean for the US deficit as lawmakers debate the next spending bill package. Also catch Lowe weigh in on the latest tariff drama in this clip here. To watch more expert insights and analysis on the latest market action, check out more Morning Brief here. If the tariff revenue is impacted by all of this back and forth, how does that impact the taxes that are potentially going to be coming in, the tax cuts? Yeah, I think this is a really good point because the tariff revenue has actually been coming into the US Treasury at quite an accelerated rate over the past couple of weeks. And so what we've seen is that it's about 190 billion on an annualized basis coming into treasury. So over 10 years, if this were to remain in place, that's $2 trillion of tax revenue or tariff revenue that's coming into the US. Now obviously, if the tariffs get pulled back and there's a lag time, that would change that trajectory. But this is also not even the full breadth of what the Trump administration was looking to do in terms of tariffs. So tariff revenue does provide a backstop for any uh deficit increase that may come from the tax and spending bill. If those tariffs were to be pulled off, that would obviously reduce, make it the deficit less better in the from its current trajectory and it could play into a little bit into Congress's uh mindset as they continue to finish this bill before July 4th potentially. But now that the tariffs remain in place, I don't think it's really going to have as much of an effect because even though Congress wasn't really thinking about including the tariffs as part of the overall package and then what their revenue would be, it does also keep them in place which means that right now, Congress doesn't have to worry about that revenue stream coming away. Um, but it might be something that they continue to keep about going forward, particularly the fiscal conservatives in the House and Senate who'd be worried about what that's going to happen to the deficit long term.
CNBC
2 days ago
- Business
- CNBC
The market's biggest trades sending skeptical message on U.S. stocks
This year has already packed a lot of action into stocks: an aggressively bullish start, a swift correction, and a full recovery from those April losses. But based on the the flows into the U.S. exchange-traded funds, where much of the daily trading action occurs across asset classes, the message coming through most clearly from investors is lingering skepticism about the strength of the U.S. equities market. May was a great month for stocks, with the S&P 500 Index up over 6%, the Nasdaq Composite up over 9%, and the Dow Jones Industrial Average up roughly 4%. But making up for April's losses hasn't removed the underlying fears from the market, with stocks sliding to start the month of June on Monday as trade uncertainty, from the state of U.S.-China deal talks to the Trump administration's battle with courts over the legality of tariffs, continue to serve as hurdles for sustained momentum. At the start of 2025, equity ETFs were trading roughly $3 billion in daily inflows, an "extreme" level of bullishness, according to recent report from Strategas Securities. Since the market recovered all of its April losses, those daily inflows have fallen by more than half, to roughly $1.4 billion, despite the rally. Where has the money been going? "Mostly, just hiding out in ultra-short duration," said Todd Sohn, senior ETF and technical strategist at Strategas, on a recent "ETF Edge" podcast. The iShares 0-3 Month Treasury Bond ETF (SGOV) and SPDR Bloomberg 1-3 T-Bill ETF (BIL) are both among the top 10 ETFs in investor flows this year, taking in over $25 billion in assets. "Skepticism, that's what the equity flows are telling us," said Sohn of the action since the market low in April. He added this suggests a year that could follow a pattern from bull market history, what he called a "reset year." Going back to 1950, years one and two of a bull market generate linear returns that take all equities higher, while third years are more often reset years that tend to reflect a cautious stance on stocks. Or, as Sohn put it: "How much of a good thing can last is a fair question." Since getting back to even, the U.S. market's 0.6% performance year-to-date through the end of May places it at the bottom of the list for 2025 relative to the performance of regional markets around the world, though it is by no means the worst country market in the world. But at least to date, the ETF flows do suggest a "year three" of a bull market cycle, which tends to more often be a trader year than investor year, with a wide dispersion in returns across equity sectors, according to Sohn. Coming off back-to-back years with 20 percent-plus returns for U.S. stocks, the top ETF categories in flows since the April 8 low are crypto, short duration bond, T-bill ETFs, and value (including overseas value stocks such as EAFE ETFs). Meanwhile, tech ETFs, single-stock levered ETFs, and cyclical and small-cap stock ETFs that are most closely linked to aggressive stock bets and conviction about the overall health of domestic economy are near the bottom of the list, with negative flows since the April low. "Folks want to hang out on the short-end of the [bond yield] curve and are very skeptical on what to do about U.S. equities," said Sohn. "It's almost like they are throwing in the towel on cyclicals and small-caps," he added. Part of the reason for the lack of interest in cyclicals is related to the yields currently on offer in the bond market, which can make cyclical plays with healthy dividend levels, such as consumer staples, financials, industrials, and materials, less attractive to investors who might otherwise assume the stock market risk for the income component. "That has disappeared with the return of bond yields," said Sohn. "There's not really any reason to hold," he added, as all the income flows that in the past may have gone into income-producing equities go to short duration bond ETFs instead. One place where investors should keep the faith with U.S. corporations is with their ability to fund bond payments, Joanna Gallegos, BondBloxx ETFs co-founder, said on "ETF Edge." After the strong years of 2023 and 2024, corporate credit sheets are "set up to weather the storm," Gallegos said, and she added that it is possible to stay shorter in corporate credit without exposing oneself to a high level of interest rate risk. After short duration bonds and T-bills, intermediate duration bonds have seen the most daily ETF flows since the April low among fixed-income categories, and are fifth overall in flows among stock and bond ETF asset classes, according to Strategas. Unlike equities, most fixed income categories have had positive returns year to date, even with yields near their highest levels in years, according to BondBloxx data. "Income is back. In fixed income, that's what is important right now," she said. "Any investor trying to offset volatility in their equity portfolio, if they haven't looked at how income is serving their portfolio, that's what they should do," Gallegos said. While Gallegos recommends investors consider investment grade credits in the BBB class, where yields are near 5%, and the first rung of the high-yield universe, BB, where yields are roughly 6%, short-duration yields are the most popular right now for a good reason. "It is hard to argue with 4-4.25% with no volatility," Sohn said. Disclaimer
Yahoo
2 days ago
- Business
- Yahoo
What Trump tariff revenues mean for the US deficit
Strategas Securities managing director of policy research Jeannette Lowe joins the Morning Brief team for a conversation on the long-term view on revenue from President Trump's tariffs and what it could mean for the US deficit as lawmakers debate the next spending bill package. Also catch Lowe weigh in on the latest tariff drama in this clip here. To watch more expert insights and analysis on the latest market action, check out more Morning Brief here.
Yahoo
2 days ago
- Business
- Yahoo
What Trump tariff revenues mean for the US deficit
Strategas Securities managing director of policy research Jeannette Lowe joins the Morning Brief team for a conversation on the long-term view on revenue from President Trump's tariffs and what it could mean for the US deficit as lawmakers debate the next spending bill package. Also catch Lowe weigh in on the latest tariff drama in this clip here. To watch more expert insights and analysis on the latest market action, check out more Morning Brief here. Sign in to access your portfolio
Yahoo
4 days ago
- Business
- Yahoo
Tariffs: Does Trump need a backup plan amid legal pushback?
President Trump is claiming that China has "totally violated" its trade agreement, in a post on Truth Social after US Treasury Secretary Scott Bessent commented that negotiations with Chinese trade officials have become "stalled." This all comes after Thursday's legal whiplash, where a US appeals court temporarily reinstated several of the administration's sweeping tariff policies after a US trade court ruled them to be illegal. Strategas Securities managing director of policy research Jeannette Lowe joins the Morning Brief team to share her perspective on the latest US-China tariff drama and what Trump's next step in his tariff strategy could look like. To watch more expert insights and analysis on the latest market action, check out more Morning Brief here. President Trump taking to truth social this morning claiming China violated its trade agreement with the US. It comes a day after Treasury Secretary Scott Beson says the stalled trade talks could warrant a call between President Trump and President Xi. Despite the 90-day pause on reciprocal tariffs that went into effect May 14th, tensions remain high. Here with more on the ongoing negotiations. We've got Jeannette Lo who is the strategist securities managing director of policy research here. I just want to get your reaction to the latest via social media this morning from Trump and and what that could entail kind of going into the weekend. Well, thank you for having me. I think one of the things that's interesting is that, you know, we had a court decision on Wednesday night overturning the authority for the president to impose tariffs using national emergencies. Then you did actually get to stay yesterday, and now here you have Trump pressuring China over its deal that they reached to lower tariffs from the really high rates of 125% down to 10% or 30% depending on which, uh, you know, terrace you're calculating at the time. But I think the point is is that Trump is also trying to pressure trade partners to show that he is still going to pursue this trade agenda of his even if there is some uncertainty that has been caused by the court decision earlier this week. And we've always been of the view that trade decisions are going to be a little bit different with China than the rest of the world. We think Trump is going to be much more hawkish with regard to China than he is with other countries, and this kind of plays into that where he is really trying to pressure China and show a little bit more stringency with them with regards to the tariffs and talking about the fact that they are not moving well in a particular direction to get a deal. But that was not necessarily a surprise. I think if we had seen a message like that coming from another country like Europe, which we saw last Friday, that would have been probably a different story. Yeah, I think that's a really great overview, and it's something that is interesting given the fact that we did have this appeal coming in overnight here. I I'm just curious, Jeanette, can you kind of lay the groundwork for where you see these tariffs heading at the current moment? Like did this ruling actually put any sort of bounds on the president's tariff policy in your view that are going to stay in place long term? Right. I think the main point is that it put, uh, it put a barrier on the president's ability to do it in an unbounded manner. That was kind of the word that was using used by the the Court of International Trade when they made their decision. So I think what's important here is that it makes it more difficult for Trump to impose more tariffs, but it doesn't take away his ability to do so. So the administration has a backup plan. Obviously, if the tariffs had to be removed immediately and the stay had not been granted, that would have caused a lot more disruption to the markets, put tariffs on, take them off, then they're probably going to go back on again. But I think what's important is we showed that we still have section 232, which is the way that the Trump administration is imposing tariffs on goods like steel, aluminum, autos, auto parts, potentially pharmaceuticals and semiconductors in the future. And then there's also these other, um, authorities. So we had section 301 that was used to impose tariffs on China in Trump's first term. That is still a tool that can be used to even increase tariffs on China quite quickly. Um, but then the Trump administration has other tools. There's a talk about whether or not he could put some tariffs in place at 15% for 150 days while they do investigations on a country by country basis to then impose other tariffs. That's kind of a clunky way to do this, but at the same time there's another method as well. There's section 338, which means that they could put tariffs in place. They only have to wait 30 days. They don't have to do an investigation, but they could impose tariffs up to 50%. So I think the larger message is that the tariffs are not necessarily going away. There's just probably even more uncertainty now about what comes next and when and when will this play out through the legal system, and do we keep the current tariffs in place or does the administration need to go to a backup plan?
