Dwarfs TayTay
Remember Taylor Swift’s Eras Tour, and how it caused economic activity and inflation to surge (albeit temporarily)? Well, we get that multiplied by at least an order of magnitude this summer in the soccer World Cup. People all over the country (and world) will go out to restaurants and bars to watch games that aren’t in their cities. As with any other disturbance in the Force, we need to assess the impact on interest rate distributions.
But first the Week in News:
· The Supreme Court Ruled against Trump. Apparently this was mostly priced-in, so there was no real impact on the markets. Trump has many options, so we did not see much of a move on Friday. Let’s see how next week goes. The key take-aways for me are:
o I originally thought that on the margin, this development is probably deficit-unfriendly, so you would expect a little bit of a selloff. But Trump increased new tariffs to 15% Saturday, so that could potentially bring in more revenue.
o This will cause more economic uncertainty for businesses. I was hoping tariff uncertainty was mostly behind us. It’s harder for some companies to plan, invest and hire when they don’t know what the economic environment is.
o In the next few weeks, we should be hearing more about what targeted tariffs we will get to replace the blanket 15% tariffs that will expire in 5 months. The tariff impact under the new authorities will be less even and there will be winners and losers in such an environment.
o I thought refunds were going to be a key issue, but it appears that issue could get tied up in the courts for years. So it won’t have much of an impact on the deficit.
o This was an important case and Trump lost, despite the Republicans having a 6-3 majority, and Trump’s picks voted 2 to 1 against him. Kavanaugh was the only Trump pick to remain a supporter. “Alleged” rapists gotta stick together! All “joking” aside, it’s possible Kavanaugh feels additional loyalty from Trump sticking with him through his contentious confirmation. The other two Trump picks (Gorsuch and Barrett) – not so much. I’m wondering if Trump’s attack is going to turn off the Justices going forward. Also, no one wants to be seen with a 36% Approval Rating, or someone mentioned 38K times in the half of the released Epstein files. We should make a mental note for the next major Supreme Court case – there will be many.
