By coinnews 
00:00 Speaker A
US stock futures are lower this morning for a second day after the S&P 500 came off of its best winning streak in 20 years, which helped erase all of its liberation day losses. But Wall Street strategists aren’t convinced of a smooth path ahead. Here to break down if the tariff optimism has run its courses, Yahoo Finance Markets Reporter Josh Shafer and okay, now there’s some optimism, I guess, but there’s still on this lack of clarity around what deals will net out.
00:50 Josh Shafer
Yeah, it seemed like right over the last two weeks as we went through this rally, kind of the key parts that we were hearing about trade deals was well, there’s discussion, right? And initially there obviously wasn’t discussion, so it seemed like that was sort of the positive news. There’s been some discussion with multiple members of the administration saying they’re nearing deals in the last week. Now it seems like strategists want to see a deal, right? What’s a deal actually look like? And then how’s the market react to that deal, right? So we’ve sort of positively priced in that the deal would bring down the tariff rate for whatever the given country is, but what is the actual number and how does the market sort of react to that remains a looming question. I think the other pieces of this rally that sort of stand out is earnings have been relatively solid for the quarter, right? Of course, you guys mentioned Ford from last night, perhaps not as solid removing that guidance, but generally going back to big tech last week. That was certainly a part of this rally, right? And you’ve seen stocks react positively to earnings, that’s helped move the index higher. Lori Calvosina over at RBC Capital markets though highlighted maybe that’s starting to run its course. What’s my next catalyst, right? And the next catalyst is probably more information on trade deals. And then also you have the Fed meeting tomorrow and I think a lot of people want to hear a little bit of a quote unquote dovish Powell where he’s perhaps ready to step in with rate cuts if needed and investors want a little bit more assurance on that front as well, but it feels like after rising about, I think it was roughly 14% from the bottom, time for a little bit of a new catalyst here and we can’t just keep going up forever, right?
03:24 Speaker A
And we don’t have any trade deals at this time. The president over the weekend saying that a deal with China could come in up to two to three weeks. Deals could come as soon as this week for other countries. To what extent are the sources you talk to really relying on those trade deals specifically as the next catalyst or are they okay with some other catalyst coming in here?
04:02 Josh Shafer
I think it mainly seems like a trade deal specifically in the next couple of weeks, Maddie. Like in the next probably by the end of May, right? I think people want to see actual progress start to happen because remember another key part of this story we’ve been talking about is sort of just how uncertainty plays a role in the economy, right? And so if we don’t know what the actual tariff rates are going to be, that continues to freeze businesses, that continues to be an overhang on overall activity. So it seems like a lot of people are circling a two to three week sort of time frame here, which would basically put us to the end of May, where it’s okay, we want to actually see something, hear something. I do think from other catalyst standpoint, the data that will start to come in over the next couple of weeks is going to start to be interesting too, right? You’re going to get an April inflation report which could in theory have some level of tariff impact into it. You’re going to get then pushing it out again over the next two or three weeks. You’ll get Nvidia earnings. You’ll also get data from May that will start to trickle in at the beginning of June and does the jobs report hold up? And now we’re talking about a month down the line, but does that continue to hold up? You’re going to start to get impacts from the tariffs that actually comes through in the data in the next couple of weeks and that feels like where it’s going to be a big test for this rally.
06:18 Speaker A
Well, the other catalyst could come from the Fed. If we hear them talk about any type of the balance sheet implications that they’re kind of navigating through at this portion and maybe not all out saying, we’re starting this major process of quantitative easing and in the absence of cutting, that is something that the markets could view as a near-term catalyst as well.
07:16 Josh Shafer
For sure, Brad. And I think the other thing I’m interested with this Fed meeting too is you’ve seen this big move in sort of investor expectations for rate cuts this year, right? Last week, investors were expecting four rate cuts. Now it’s already down to three in less than a week post that jobs report. So it seems like investors have started to come to a realization that maybe the Fed won’t cut that much this year and maybe those rate cuts aren’t coming in June. They might start in July. They might start later in the year. But if Powell actually says that tomorrow or sort of insinuates that, do markets still take that in stride, right? Sometimes you have these expectations going into a Fed meeting, Fed chair J. Powell says something that he said before or says something that the market felt like it understood, but you still get a negative reaction to that or perhaps a positive reaction to that. There’s usually some kind of sharp move even if he’s just confirming what people felt. So I think it’ll be interesting to see what direction we go, come, you know, 3:00 tomorrow.
08:40 Speaker B
Yeah, very exciting to keep an eye on that meeting. As always, the most important since the last jobs. Thanks so much. Really appreciate it.