Stocks at New Highs as Trump Turns the Fed – and Our Hot Take on This Morning’s Supreme Court Ruling

Today’s SCOTUS ruling neutering federal district judges’ issuance of universal injunctions does not apply to the litigation against Trump’s IEEPA tariffs. They will be struck down by the appellate court, and again by the Supreme Court. Stocks are making new all-time highs, with or without the Magnificent 7, which itself is considerably off its December peak. 365 days-ahead forward earnings estimates have been restored to all-time highs, for the S&P 500 overall, the Mag 7, and the S&P 493. Despite a bear market and a negative GDP quarter, Trump’s approval has remained strong. With triumphs in Iran and with NATO, Trump has set off an influence cascade at the Fed. Markets now expect deeper rate cuts, and sooner, than they did at the worst of the tariff panic in April. Then the cuts signaled recession fear. Now they signal optimism that tariffs won’t unleash inflation. We don’t rule out a cut at the July FOMC.