The S&P 500 surged low prices to 8.5% on Wednesday as the administration announced a 90-day tariff suspension for all countries except China. Does it sound familiar? In Tuesday’s commentary, we wrote:
For those with bearish nightmares, we share one important takeaway from Monday’s market roller coaster. The market may explore new lowest over the next few months, but we must be grateful that there is plenty of fuel for a fair bounce. One of the key evidence in support of the paper was a tweet claiming that Trump is considering a 90-day suspension on all tariffs except China.
After the official announcement of the 90-day suspension, “fuel” has exerted the market on its third-largest profit in history. The two previous cases both occurred in October 2008. The point is that news about retaliatory tariffs, tariff suspensions and tariff contracts continues to drive the market with extreme volatility. If Trump can turn the 90-day suspension period into a series of constructive agreements with our biggest trading partners, the tanks have more bullish fuel. Negotiations with China are the most important thing. Retaliation tariffs from China, and the US has heavier in the market. The longer negotiations with China, the more negative consumer and investor sentiment will have a negative impact on the economy and market.
What to see today
Revenue
economy
Market trading updates
yesterdaywe discussed the market’s response to a 90-day suspension of tariffs that surged stocks at the third-largest day rally since World War II. As mentioned yesterday:
“With weekly ‘sales signals’ in place, there’s a very high chance that the market will stall at these levels (best case scenarios) or retraces at recent lows (most likely cases). Let’s see if you can get a follow-through for today’s deals.
Unfortunately, the market was unable to get a follow-through for yesterday’s purchase, and it was a classic bare market rally. As we discussed in SimpleVisor yesterday morning, we took action and used rallies to recalibrate our portfolio and reduced exposure to equity risk.
“As we discussed over the past two weeks, deep sales terms in the market lead to a sharp, reflective rally that should be sold to reduce risk and rebalance portfolio. That rally came yesterday and reduces risk on all models this morning. The first step is to reduce exposure to positions, reduce weight on targets, and increase cash levels. The next step is to add short positions to your portfolio if necessary. Today is Step 1. ”
It raised its cash level to nearly 20% in its 60/40 portfolio and dropped its stock exposure to 49%. With weekly sales signals in place, consider reducing stock risk by 4-5% by adding short positions to your portfolio at the next rally.
Inflation has fallen sharply, with 10 and 30-year bond auctions on a steady pace, but the risks in the bond market are spreading to the stock market. For more information about “Basic Transactions” And why it is such a risk, here is an excerpt from Wednesday’s actual investment show.
The market will remain unsold in the short term and should provide opportunities for recursive bounce to reduce risk and rebalance if necessary. I think the larger correction process will remain fully intact and will likely ultimately be retested at a low low before this process is complete.
I’ll trade accordingly.
CPI is surprised at the drawbacks
The CPI (-.1%) and Core CPI (+.1%) were 0.2% below the forecast. The Fed’s preferred inflation measure, Core CPI (+2.8%), is below 3% for the first time since March 2021. Additionally, the so-called Supercore CPI has dropped by 0.24%, the lowest reading since May 2020.
CPI rent inflation continues to decline steadily, as shown below. My hair is currently sitting at less than 4%. More divergence of rent and shelter prices will continue, but this may slow down the pace.
The data is very good, but the initial impact of tariffs has not yet been felt. As the effects of tariff inflation and deflation ripple through the economy, inflation data could become unstable in the coming months.
How to use tax harvesting
For investors looking to reduce their tax liability while optimizing their portfolios for growth, the tax LOSS harvesting strategy can be a valuable tool. By strategically selling low-performing investments to offset capital gains, investors can minimize tax burdens and improve after-tax returns.
Understanding how tax decline functions work, when to apply, and how it fits into a broader, tax-efficient investment strategy can help investors make smarter decisions and maximize their wealth over time.
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