Tariffs? Social Media Wars? The Market Appears Impervious
June 7, 2025
I imagine that people who aren’t fans of President Trump or Elon Musk might have enjoyed the mudslinging texting spectacle that we were all treated to on Thursday. The bromance that just the week before appeared to be durable, strong, and ongoing suddenly fractured spectacularly. While I am a fan of neither man, I did not take any pleasure in the outrageous verbal bashing which surely included both falsehoods and hyperbole. It might have been funny were it not so alarming and a national embarrassment…two really wealthy men with great power creating a public spectacle from which nobody benefits – certainly neither of them, the US neither.
While that spat was extraordinary, in other respects it was just more of the same from the current administration – noise, confusion, uncertainty…a lack of any clarity or clear purpose…and the requisite personal attacks and reprisals. Maybe the growing movement to ban smart phones in schools during class time should be extended to politicians…no social media during work hours. Get off your social media feeds, focus on the monumental tasks at hand.
Despite all these distractions, the teeth gnashing over budget deficits and tariffs, and the negative market sentiment that lingers, the stock markets have recovered their losses from earlier in the year. After all the drama and volatility, the NASDAQ is flat for the year and the S&P500 is up just under 2%. Concerns over tariffs and trade wars, international tensions, and budget deficits weighed heavily and yet to this point have had little impact. Of course that broad view obscures the fact that so far in 2025 some market darlings have dropped meaningfully – Apple is down almost 20%, Tesla nearly 25% - and others have soared – Netflix has risen almost 40%, Robin Hood nearly 90%. More so than in the recent past, it is a stockpickers market.
And all the concerns, and the pronounced lack of policy clarity, remain. It is often said, including in this space with some frequency, that markets don’t like uncertainty. Maybe it is just the case that professional investors and money managers don’t like it as, according to many sources, many of them remain underinvested, while retail investors, often derisively referred to by the pros ‘dumb money’, have led the way. They are not just staying invested, inflows of capital into the markets have increased, investors continuing to buy when the market dips, less troubled about lofty market multiples and high equity valuations.
The market action has been surprising since all the policy concerns remain, the progress on trade agreements scant, no real clarity on how any of this will ultimately resolve. Currently in force new tariffs are several times the historical norms. The threat of higher, reciprocal tariffs remains. The deadline dates get ever closer. Do people really believe that there will be no impact on prices, inflation, consumer sentiment and consumption when the effect of tariffs really begins to be felt? And the markets will just sail along unaffected? Really? Investors may be drawing too much comfort from the TACO (Trump Always Chickens Out) expectation? Given how mercurial the President remains, that is a questionable rationale and very flimsy support, if any, for a positive market outlook.
Adding to uncertainty in the investment climate is the emergence of AI. Will its use result in greater corporate efficiency and higher earnings…and also large job losses? Will it create many new jobs in previously non-existent categories? Between the changes that Covid introduced (remote work, Zoom meetings, etc.) and the unfolding impact of the use of ever improving artificial intelligence, the world of work remains unsettled. A perfect segue then (I just pulled a triceps muscle patting myself on the back) to a recent article about companies experimenting with a four-day work week and the surprising results. With widespread AI use on the horizon, we can/should/need to think about work changes and working differently. Have a read and consider the surprising results.