Quarterly Outlook
Q3 Investor Outlook: Beyond American shores – why diversification is your strongest ally
Jacob Falkencrone
Global Head of Investment Strategy
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London Quick Take – 7 July – TACO Time or New Risks on the Trade Front?
Neil Wilson
Investor Content Strategist
Note: This is marketing material. This article is not investment advice, capital is at risk.
President Trump is now sending out letters to countries that have not yet signed a trade agreement with the US, informing them what their tariff will be from August 1st. He’s mentioned a tariff rate of between 10% and 70%. The market assumes that if 70% is announced Trump will back down.
Trump said there would be a “combination of letters, and some deals” in the coming days and “most countries done by July 9th, either a letter or a deal”. Deals are said to be announced from 12pm ET today.
Treasury Secretary Scott Bessent said tariffs will “boomerang” back to April 2nd levels if deals are not done soon.
It’s not 100% clear whether July 9th is still the official deadline for a deal – Bessent said they would be “very busy over the next 72 hours”. But the fact that August 1st is being mentioned suggests they are buying themselves a little more leeway to get countries to agree deals without officially “chickening out”. This is classic Trump mix of confusion and 4D chess. The additional 10% number for BRICS-aligned nations is a new risk factor that introduces extra geopolitical spin to the trade war - on the margins currently and I would consider this a ploy to speed things up.
Meanwhile, Elon Musk launched his own political party, criticising the expansion of the deficit. Trump called him a “train wreck” who had gone “off the rails”. Shares of Tesla fell in Frankfurt as investors are worried about two things – one is more Trump ire affecting subsidies and the other more importantly is a distracted Musk. Investors had cheered Musk stepping back from frontline politics but are now worried he’s going to sucked back in and take his eye off Tesla.
Last week, the S&P 500 rose 1.7% and the Nasdaq 1.6%, both hitting record highs, while the Dow gained 2.3%. Investors are watching for earnings season catalysts – kick off is next week. The rally is now broadening beyond big tech, with materials, financials, and energy sectors outperforming. Small caps (Russell 2000) are finally positive for the year. Nvidia hit a fresh all-time high - will it be the first $4tn company?
London Quick Take – 7 July – TACO time or new risks on the trade front?
Key Points
- Trump said the US will charge an extra 10% tariff on countries that are aligned with the BRICS
- The US will start sending out tariff letters and also announce trade deals, from 12 pm eastern time
- Tesla shares fall after Elon Musk launched his own political party, criticising the expansion of the deficit
- Shell shares slide on weaker gas output forecast
Trade tensions are back in focus this week with the usual clamour. On the one hand good TACO (Trump always chickens out) news as it seems that the July 9th deadline is effectively being extended to August 1st. But on the other hand Trump threated any country aligning with the BRICS (Brazil, Russia, India, China and South Africa) an additional 10% tariff, which has helped push stocks down in the overnight Asian session and we have a mixed start to trade early doors in Europe on the heels of some sharp losses on Friday. The DAX opened up, the FTSE 100 opened down as Shell slid over 3% as it lowered its gas output forecast and crude prices traded soft on the back of a larger-than-expected OPEC+ production increase. US futures are weaker as traders return following the July 4th holiday and last week's record highs.
President Trump is now sending out letters to countries that have not yet signed a trade agreement with the US, informing them what their tariff will be from August 1st. He’s mentioned a tariff rate of between 10% and 70%. The market assumes that if 70% is announced Trump will back down.
Trump said there would be a “combination of letters, and some deals” in the coming days and “most countries done by July 9th, either a letter or a deal”. Deals are said to be announced from 12pm ET today.
Treasury Secretary Scott Bessent said tariffs will “boomerang” back to April 2nd levels if deals are not done soon.
It’s not 100% clear whether July 9th is still the official deadline for a deal – Bessent said they would be “very busy over the next 72 hours”. But the fact that August 1st is being mentioned suggests they are buying themselves a little more leeway to get countries to agree deals without officially “chickening out”. This is classic Trump mix of confusion and 4D chess. The additional 10% number for BRICS-aligned nations is a new risk factor that introduces extra geopolitical spin to the trade war - on the margins currently and I would consider this a ploy to speed things up.
Meanwhile, Elon Musk launched his own political party, criticising the expansion of the deficit. Trump called him a “train wreck” who had gone “off the rails”. Shares of Tesla fell in Frankfurt as investors are worried about two things – one is more Trump ire affecting subsidies and the other more importantly is a distracted Musk. Investors had cheered Musk stepping back from frontline politics but are now worried he’s going to sucked back in and take his eye off Tesla.
Last week, the S&P 500 rose 1.7% and the Nasdaq 1.6%, both hitting record highs, while the Dow gained 2.3%. Investors are watching for earnings season catalysts – kick off is next week. The rally is now broadening beyond big tech, with materials, financials, and energy sectors outperforming. Small caps (Russell 2000) are finally positive for the year. Nvidia hit a fresh all-time high - will it be the first $4tn company?
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