š¦¢ The beginning of a black swan? July 31st could be a turning point.
Markets are volatile, Trump is making frequent moves, and Powell remains calm. The world may be on the brink of another major change.
š„ Trump vs. Powell: The conflict intensifies
The Fed's decision to keep interest rates unchanged was not surprising.
Talk of a July rate cut remains speculativeāand Trump isn't buying it.
Just minutes before the Fed's announcement, Trump pressed Powell, asking, "I heard there's a September rate cut?"
Powell, responding with his usual vague "data-dependent" response, refused to make a commitmentāas the market expected.
š„ Trump flips the table: Tariffs strike again
After Powell maintained a wait-and-see stance, Trump swiftly countered:
ā ļø New 40% tariffs on Brazilian imports, adding to the existing 10%, for a total of 50%.
This isn't just symbolic:
Fruit tariffs will hit beverage companies.
Coffee, beef, and poultryā70% of Brazil's exports go to the USāwill face severe cost inflation.
These measures will exacerbate inflationary pressures, sending business costs soaring.
Trump is essentially using tariffs as a weapon to force Powell to back down.
š Tariffs on copper and low-priced goods are also being adjusted:
New tariffs on copper and goods priced below $800 are about to take effect.
Business costs will rise sharply within two weeks, and the inflationary effects will be felt within a month.
š§ Market Outlook: August could be very difficult
Tariffs will push inflation higher, challenging Powell's data-driven stance.
If Powell doesn't cut rates in September, he may be forced to act in Octoberābut at a significant cost.
Caution is necessary in the short term.
š Latest Fed Watch Indicators:
Probability of a September rate cut: 49.6% (previously ~60%)
Expected rate cuts for the full year: 36 basis points (previously 44 basis points)
Summary: The market is entering a volatile and unpredictable phase. Trump is clearly increasing pressure, Powell remains steadfast, and tariffs could become a black swan event that triggers a dramatic shift in the third quarter. Exercise cautionāAugust won't be an easy month.