Remember when we thought Trump’s tariff threats were just, you know, threats? Yeah, about that…
August 1st was supposed to be Trump’s “GREAT DAY FOR AMERICA” (his caps, not mine), but the stock market had other plans. Spoiler alert: it wasn’t so great for anyone holding stocks.
Here’s what went down: After weeks of investors playing the classic “Trump Always Chickens Out” (TACO) trade – basically betting that all this tariff talk was just noise – reality came knocking. Hard.
Trump actually followed through on his August 1st deadline, signing an executive order that slapped import duties ranging from 10% to 41% on various countries. Plot twist: he told NBC it was “too late” for nations to avoid these tariffs, though he left the door cracked open for future deals. Classic Trump – one hand gives, the other takes away.
The market’s reaction? Let’s just say it wasn’t throwing a parade:
- S&P 500: Down 1.77% (ouch)
- Dow Jones: Dropped 513 points (double ouch)
- Nasdaq: Fell 1.61% (triple ouch)
But wait, there’s more! As if tariffs weren’t enough to kill the vibe, July’s jobs report decided to crash the party too. The economy added a measly 73,000 jobs versus the expected 100,000. Even worse? May and June got revised down by a combined 258,000 jobs. That’s like finding out your favorite restaurant has been serving you fake meat for months.
Treasury yields took a nosedive (10-year bonds fell 10 basis points to 4.25%), and suddenly everyone’s talking about Fed rate cuts again. Funny how quickly sentiment changes when the numbers don’t cooperate.
Art Hogan from B. Riley Wealth didn’t mince words: “Today’s Jobs report is unambiguously soft and a reflection of the trade and tariff impact on economic growth.” Translation: tariffs are already messing with the economy, and we’re just getting started.
The kicker? Some countries actually got their tariff rates reduced despite not making any deals. Taiwan, India, and Malaysia caught a break, while Brazil and Switzerland got hit harder. It’s like Trump’s playing tariff roulette with a globe.
Here’s the thing about the TACO trade – it worked until it didn’t. Investors got comfortable assuming Trump would always back down at the last minute. But sometimes the chicken doesn’t cross the road; sometimes it just stands there and blocks traffic.
Chris Zaccarelli from Northlight Asset Management summed it up perfectly: “The stock market will probably move past this particular report and keep climbing this month, but today could be an ugly day.” And ugly it was.
The silver lining? This might just be a speed bump. Markets have a funny way of shrugging off bad news when the underlying economy is still chugging along. Plus, with rate cut odds jumping to 67% for September, the Fed might just ride to the rescue.
Bottom line: tariff pain is real, job growth is slowing, and the market is having a moment. But hey, at least we’re all learning together, right?