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Well, that was unexpected. So how is this going to work with Mexico? After we just went through a process of a new trade deal, President Trump slaps a 5% tariff on all Mexican exports, and it could rise to 25% by October 1. I mean the USMCA hasn’t even been ratified yet?
The market is not going to like this one bit, especially with what is happening with China. It is nearly impossible for me to determine what the potential impact could be on the US economy or the S&P 500 earnings estimates.
It will not be good for the Auto stocks that is for sure. The US imports about $100 billion a year in vehicles from Mexico. Â
I can tell you that this makes me feel more nervous and concerned than China does just because it would seem to me that Trump will use tariffs as a way to impose his will. A part of me also wonders if this is nothing more than a political stunt. Remember the wall that Mexico was supposed to pay for? Well, now he can say Mexico is paying for it, or he can say I got Mexico to fix the border crossing problem without the help of Congress.
The S&P 500 futures are pointing to a decline of about 80 bps at this point, and I’m not sure how severely the market will respond to this latest round of trade news, but I can’t expect for to be positively received.
At this point, the futures are holding the lows from yesterday, which is, of course, is good, but not comforting because it also means more declines may lie ahead.
I had planned on writing an article tonight talking about several positive developments I had been noticing in the market recently. Maybe I will get the opportunity tomorrow night.
Sorry for the late and unusual commentary, but it has been an unusual day.
-Mike
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Charts used with the permission of Bloomberg Finance L.P. This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.