Tariffs decline -> bull market
May. 12th, 2025 05:48 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
dennisgorelikhttps://www.perplexity.ai/search/did-xi-jinping-and-trump-reach-eXxDxgqlQMOhpkEhT2D.3g#01) Now that Trump backed down from the crazy tariffs - Trump's policy looks somewhat proper again.
U.S. President Donald Trump and Chinese President Xi Jinping reached an agreement to postpone the escalation of tariffs for 90 days and keep tariffs at a 10% rate during this period.
2) Trump's administration made a correct decision to abandon tariff's war.
This is one of the key reasons why the US economy will grow.
If crazy tariffs did stick - the US economy would have declined.
3) The tariffs does not have to be abandoned completely in order to avoid major harm to the economy.
As long as tariffs are reasonably low - the economy is not going to get hurt too much.
The harm from the tariffs is proportional to the square of the tariff rate:
HarmFromTariffs ~= tariffRate^2
So the harm from 50% tariff is 25 times bigger than the harm from 10% tariff.
4) GLD dropped today -2.82% to 298.19 (from 315.59 top on 2025-04-21).
It looks like investors rebalanced from GLD to stocks today.
/ES (S&P 500 futures) was 3.35% up today.
5) My guess is that /ES growth (bull run) will continue tomorrow as well (just not nearly as fast as today).
