Dear all,
Global equity markets rose almost universally in May, with the S&P 500 gaining 6.3% and European and Nikkei indices both posting gains above 4%. The Philadelphia Semiconductor Index and Nasdaq surged nearly 10%! Many markets have now largely recovered the ground lost since the reciprocal tariff announcement on April 2, validating our earlier assessment: April 2 marked the peak of tariff-related downside risks, and Trump would only soften his stance from there.
Meanwhile, from the perspective of bond and currency markets, US Treasuries and the US dollar remain relatively weak. As time passes, the strategic contours of the Trump administration's actions are becoming increasingly clear. In this article, we’ll focus on analyzing Trump’s maneuvers and share our insights into the future outlook for equities, currencies, and fixed income.
I. High Tariffs Are a Red Herring—Trump’s Real Goal Is Getting Other Countries to Spend
Since the reciprocal tariffs took effect, we’ve consistently communicated to users that Trump’s high tariffs are unsustainable due to three key contradictions. As of now, his true strategy is becoming more evident.
First, we saw the May 9th agreement between the US and UK
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