Stocks rallied back strongly yesterday, though they’re giving up a bit of ground so far this morning. Gold and crude oil are mixed, while Treasuries are rallying and the dollar is down.
Get used to the term “reciprocal” when it comes to tariffs. President Trump is vowing to implement tit-for-tat tariffs by country after an analysis is concluded April 1. The list of targets will be determined by a broader evaluation of tax, regulatory, and even currency policy – with traditional enemies and allies alike potentially slapped with tariffs.
As you can see in this chart of the SPDR S&P 500 ETF Trust (SPY), stocks rallied sharply late yesterday though. Why? Because of the later-than-expected date of implementation. Wall Street is also speculating that any tariffs ultimately implemented could be smaller than feared.
SPY (5-Day Chart)
Has the Federal Reserve turned into a non-factor? It’s been a while since you could say that. But the effect of this week’s developments (CPI and PPI inflation, Fed Chair Jay Powell testimony in Congress, etc.) has been to push the Fed to the sidelines. Maybe for a long time. Rate futures markets no longer see even one cut happening until September, and even then the probabilities of a move aren’t overwhelming (43%, give or take).
First, it was eggs we had to worry about. Prices surged 53% year-over-year in January due to supply shortages driven by the culling of chickens to stem the spread of Avian flu.
Now it’s coffee. Coffee futures are hovering near 50-year highs, and have risen more than 30% this year alone. The culprit: Lousy weather in countries like Vietnam and Brazil that supply beans. That’s leading to price hikes further down the coffee production and supply chain. Instant coffee alone jumped 7.1% in price last month. Guess breakfast dates are off the menu this Valentine’s Day!
Editor’s Note: I’ll be on-site hosting our 2025 MoneyShow/TradersEXPO Las Vegas most of next week. My Market Minute column will be on hiatus until Friday, Feb. 21. I hope to see you at the Paris Las Vegas soon!
