based on materials from the site - By Cryptopolitan_News
Investors and leading banks fear that high prices for American stocks create a false sense of security for companies, downplaying the economic threats from Trump's forthcoming tariffs.
Some investors and bankers, including the leadership of Amundi and JPMorgan Chase, say they already see signs of complacency in the market. They argue that traders are overly optimistic, believing that the U.S. president will ease destabilizing economic policies, but consider this confidence misplaced.
To start, JPMorgan Chase chief Jamie Dimon commented, "Unfortunately, I think there's complacency in the market." Vincent Mortier, chief investment officer of Amundi, Europe's largest asset management company, shared a similar remark, warning about the growing confidence in 'Taco' (Trump Always Chickens Out). Trump is ramping up threats of tariffs as markets bet that he will blink.
A former senior Trump official expressed a similar opinion, noting that markets are now confident in Trump's abandonment of his tariff policy. However, he added that he does not believe Trump will back down, stating, "Trump has always loved tariffs."
The S&P 500 index has risen by 30% since April, recovering from earlier lows caused by Trump's proposed retaliatory tariffs. Stock growth resumed after he suspended the tariff policy, lowering tariffs for several countries to a baseline of 10%.
This week, Trump announced that his administration is considering imposing additional tariffs on several countries. He sent letters to at least 20 countries, including his trade allies Japan, Canada, and Brazil, informing them of potential new tariffs if they do not discuss and agree on trade agreements. If Trump follows through on his threat, Brazil could easily face a 50% tariff.
Nevertheless, stocks largely ignored his recent tariff threats. Despite the market's position, the U.S. president firmly adheres to his plan to impose high 'reciprocal' tariffs starting August 1, warning that an extension without trade agreements will not be granted. So far, only the UK, China, and Vietnam have reached agreements with the U.S.
Research groups from several Wall Street banks expect Trump to soften his most aggressive tariffs to avoid further market upheaval. This forecast has largely contributed to maintaining stability in the equity and bond markets while simultaneously lowering borrowing costs for companies.
American investors believe that tariffs are not the only issue.
However, some bankers and investors are concerned that the president may maintain the proposed tariffs. Robert Tipp, head of global bonds at PGIM, stated that the Taco idea may fail in such an unpredictable situation. He added, "Tariffs that ultimately remain in place are quite high. And yet, markets continue to evolve. Will the day of reckoning come?"
Some also argue that tariffs are not the only issue investors should be concerned about. The recently signed 'Big Beautiful Bill' raises analysts' concerns about the growing national debt. Some economists predict that this bill could increase federal debt by trillions of dollars.
A senior executive at one of the leading American banks stated that the policies and tax legislation of the Trump administration have undermined confidence in the U.S. as a stable and reliable store of value. According to the executive, investors are reassessing their investments in U.S. assets more seriously than ever before, and many privately acknowledge that the traditional 'risk-free premium' of the country has evaporated.
He emphasized that he is most concerned about the growing U.S. budget deficit and warned that tax increases will ultimately negatively impact the dollar.
Another senior executive at an international bank agreed that the U.S. has lost its status as a 'safe haven.' He stated that while the U.S. remains a critically important market, doing business in the country has become more expensive. He also expressed concern about rising political tensions, particularly regarding the rule of law. In his opinion, the Trump administration's attacks on law firms, the media, and universities are damaging the country's status.
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