Obliteration Day marks a reset—a moment that challenges some of my foundational assumptions. Below are a few scattered reflections:
- Tariffs are likely here to stay.
- It may take months—not weeks or days—to gain clarity on the ultimate tariff levels. This time, they’ll likely be applied by country, not by specific commodity or product.
- A possible (unintentional?) side effect: new opportunities for U.S. exports.
- Tariffs will push prices higher. That means inflation, and U.S. consumers will be footing some of the bill.
- This could mean a higher sustained inflation rate—say goodbye to the “Goldilocks” 2% inflation and 4.x% long-term rates?
- Some tariff costs will be absorbed by companies, leading to margin erosion and weaker earnings.
→ What’s the potential impact on SPY earnings? - If we’re settling into a world of higher inflation, will that mean permanently lower valuations—i.e., lower PE ratios?
- Expect to hear arguments like “tariffs will pay for tax cuts.”
→ But who actually benefits? Could we see no taxes on Social Security or TIPS? Higher SALT deductions? Credits for buying American-made goods?
→ Or will the gains just flow to the top 1%?
→ Do we need to rethink tax and retirement planning assumptions?
PS: Let us use this thread to discuss policy without politics, if we could.