It’s a Trump-watching market. Two issues to regulate proper now

There are two big things to watch this week:

1) Trump’s next tariffs

Trump has promised ‘reciprocal’ tariffs on Tuesday or Wednesday but they won’t go into effect immediately. It’s not clear exactly what he’s after here but the market reaction has been telling. Spoos gapped down 30 points at the open but were immediately bought while the US dollar rally also largely reversed. Tariffs are increasingly viewed as posturing rather than policy but we will wait for the details and evaluate from there.

2) Congress

Politico was out with an interesting report late yesterday highlighting some of the fault lines in the Republican party around tariffs, tax cuts, deficits and other priorities. The short answer is that none of it is going to be easy and nothing can be taken for granted. It’s tough to say what the market is pricing in but I’d strongly argue that a tax cut extension is nearly-fully priced in … but there are risks. The rest of Trump’s tax cut wish list looks DOA.

What’s next? Trump will be on Fox at around 6 pm ET and is later scheduled to be on a radio show.