This summer will be crucial for the economy and the Wall Street



If you have followed the seasonal investment council of “Sell in May and go away”, you should perhaps rethink, since the prospects for the economy and the financial markets will probably be determined in the coming months.

This summer, several main events, data records, progress reports and offers are due. By autumn, the effects of the tariffs and financial policy of President Donald Trump should be clearer, which the Federal Reserve gives enough trust to react to interest rates.

Here is a look at the factors that give the scale:

A big beautiful bill

A key piece could come so quickly this week. Trump set a deadline for the Congress on July 4 to adopt his so -called a great nice bill, which contains its tax cuts and expenditure priorities.

While the House of Representatives adopted a version of the legislation and the version The Senate has progressed a separateThe close majorities of the GOP in both chambers make the time of the later package and its exact provisions less secure.

All the required congress motifs could drive the timeline after 4 July, especially now that some Republicans have announced You will not strive for a re -electionThey are less susceptible to Trump’s arm Twisting.

Wall Street expects tax cuts to juic the economy and the stock market, while the bond market will observe the effects of the legislation on the US debt. The Congress’s budget office has estimated that the version of the Senate law is almost added 3.3 trillion US dollars to deficits Over a decade.

More fiscal sticker shock could provide the returns of the Ministry of Finance higher and exert more pressure on the dollar, which has already dropped by 10% this year, the worst performance in the first half in more than 50 years.

Debt

Finance Minister Scott Bessent estimated that the United States can no longer pay its bills by mid to late summer, unless the debt limit is increased.

While he has sworn that the United States will never be in arrears, it is at the congress to increase the debt limit so that the finance department can issue new bonds for service interest costs and due datts.

A big beautiful calculation would increase the debt limit by trillion dollars. In the meantime, the financial department has used its extraordinary cash management measures to avoid failure.

Bessent said last week that he expanded the authority of his department to use these extraordinary measures on July 24th in one obvious memory for the congress Increase the debt limit before your typical August break.

The failure of increasing the debt limit and preventing a US failure would trigger a global financial collapse.

Customs and trade agreements

Trump administration officers have said since the “Freedom Day” in April that large trade agreements are imminent. So far, the United States has made agreements with Great Britain and China, while negotiations with other top trading partners are continued.

In the meantime, the 90-day break to Trump’s “mutual” tariffs will fall for falling for the “mutual” tariffs on July 9, whereupon they would fall back on levels that triggered an epic stock market sale.

Bessent has signaled flexibility in this period and said that a dozen trade agreements could be achieved by the laboratory day. But at the weekend, Trump confirmed his wish to do without further discussions and Set a tariff rate one -sided in every country.

A sudden return to high tariffs would deliver another jerk in Wall Street, which had expected the tasks finally use 10% For most countries and 30% for China – transformable values ​​that could mostly be absorbed without too much pain.

Federal reserve

Customs and their effects on inflation will strongly influence the central bank if they cut off the interest rates. The previous prices have not resulted in a major influence of tariffs, and some Fed officials said that this is proof that inflation is tame enough to justify the reduction in installments.

However, the chairman of FEDS Jerome Powell and other political decision -makers have announced that they need at least a few more data for data to be sure that inflation is actually on the right track.

If the upcoming data show that inflation effects in connection with tariffs are only one -off inserts that do not increase the inflation expectations of consumers for a long time, the reduction in installments could take place in autumn.

While Trump immediately requested lower interest rates, he could also make it more difficult for political decision -makers to do so. You can strive to only prove to the markets that they are independent of political pressure. The rejuvenation of tariffs could rejuvenate the inflation. The name of a “shadow” fed chair could even be stirring Revolt in the Federal Open Market Committee.

Corporate results

From July, the winning reports for the second quarter will be released, which the Wall Street gives a fulsomer perspective on how the tariffs – and economic uncertainty have caused – that affect profits and the prospects for profits.

Since companies had convened the imports at the beginning of the year in order to be ahead of the tariffs, the results did not reflect fully higher interest rates in the first quarter.

But these stocks are exhausted and force companies to increase prices for consumers or eat tariffs and reduce the profit margins.

In addition, this will be fluid in the profits of how much or little companies want to invest and hire in an economy that slows down in the middle of Trump’s trade war.

The financial policy of the White House will also influence the result such as tax cuts, the end of certain tax credits, more defense spending and less expenses for the social security network clouds by corporate America and consumers.

Wildcard: The Middle East

A tender ceasefire between Israel, Iran and the USA has reduced oil prices because the markets are less concerned with a sudden pension disorder.

But Trump said he was open to bombing Iran again when it is necessary to cripple Tehran’s nuclear program. This arises contradictory reports on how much Iran’s skills were actually damaged.

Renewed battles could carry out a further increase in raw prices, set consumers of the expenditure of power, the revival of inflation and the further reduction of the prospects for FED installment cuts and the economy.

I wish you a nice summer.



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