Odds Of New Highs For Stocks Increasing | Lance Roberts
TL;DR
Market technicals have reset to neutral levels supporting potential new highs, while the Supreme Court's ruling against IEEPA-based tariffs merely shifts the administration to alternative legal frameworks with Iran tensions now posing the greater volatility risk.
📊 Market Technicals and Economic Data 3 insights
Technical indicators reset from overbought levels
Momentum indicators and relative strength have worked off excessive overbought conditions since November, reloading bullish support for the market.
GDP weakness offset by strong consumer spending
Weaker-than-expected GDP data paired with robust personal consumption eased recession fears and supported earnings growth expectations.
Capital rotating back into mega-cap tech
Money flows are returning to beaten-down technology leaders including Google, Meta, Amazon, Apple, and Nvidia, which are driving market gains.
⚖️ Supreme Court Tariff Ruling 3 insights
IEEPA struck down but alternatives exist
While the Supreme Court ruled against tariffs imposed under the International Emergency Economic Powers Act, the administration can maintain 15% tariffs through 180-day renewal frameworks.
Markets rallied on capped uncertainty
The market welcomed the ruling because it potentially caps maximum tariff rates at 15% for some countries while trade uncertainty had already been priced in.
Collected revenue unlikely to be refunded
The ruling creates legal questions about tens of billions in monthly tariff revenue already collected, though repayment appears politically improbable.
🌍 Strategic and Geopolitical Implications 4 insights
Tariffs achieved negotiating objectives
The tariff strategy successfully secured restructured trade deals with major world economies, serving as the necessary leverage for negotiations.
Geopolitical deterrent power diminished
Threatening 100% tariffs against Iran and other nations becomes legally challenging without congressional approval under remaining tariff authorities.
Iran tensions surpass trade as volatility risk
Potential disruptions to the Strait of Hormuz and escalating tensions with Iran pose greater near-term market volatility risks than trade policy.
Filibuster elimination remains unlikely
Despite pressure to eliminate the filibuster to cement executive actions before midterms, the long-term political risk of simple majority rule prevents this nuclear option.
Bottom Line
With technical indicators reset and tariff uncertainty largely priced in, investors should monitor geopolitical developments in the Middle East while recognizing that trade leverage will continue through alternative legal channels despite the Supreme Court ruling.
More from Adam Taggart | Thoughtful Money
View all
The Market Just Broke Below A Critical Support Level | Lance Roberts
The S&P 500 broke below its 200-day moving average for the first time in 214 days amid geopolitical oil shocks, creating a dangerous divergence as analysts raise earnings estimates while markets price in the risk of prolonged high energy costs crushing consumer spending.
A Market "Retrenchment" Ahead Looks Likely | Jonathan Wellum
Jonathan Wellum warns that fundamentals point to a likely market retrenchment as rising interest rates, energy-driven inflation, and Middle East geopolitical instability converge to pressure an already indebted global economy, urging investors to maintain strict discipline and long-term focus during increased volatility.
Is A Private Credit Meltdown About To Take Down The System? | Chris Irons
Chris Irons warns that private credit markets are experiencing severe stress with major funds gating redemptions, while broader equity markets remain dangerously overvalued due to quantitative easing distortions that may have permanently reset historical valuation norms higher.
The Most Important Monetary Development Since The End Of The Gold Standard? | Brent Johnson
Brent Johnson argues that stablecoins represent the most significant monetary evolution since the end of the gold standard, with the U.S. government now co-opting this private innovation to potentially control a new parallel financial system worth hundreds of trillions, accelerating global dollarization while triggering a high-stakes battle between banks, tech giants, and private issuers for dominance.