In this week’s edition of The Steady Investor, we’re delving into the crucial market factors that every savvy investor should watch closely, including:
• The U.S.’s current strategy to compete with China
• Americans are down on the economy
• U.K.’s inflation update
The U.S. Ramps Up Tariffs on Chinese Goods – The U.S. government imposed a raft of new tariffs on imports from China last week. Among the changes: a 25% tariff on steel and aluminum products (up from 7.5%), a 50% tariff on solar cells (up from 25%), a 25% tariff on shipping cranes, and an increase of the tariff rate to 25% on storage batteries. The two most notable tariffs, however, were an increase from 25% to 50% on Chinese semiconductors and 100% tariff on Chinese EVs—even those made in Mexico. These tariffs may seem large and economically impactful, but the White House estimates that tariffs would apply to $18 billion in goods—not a very significant amount relative to total imports and trade. Consider, too, that the U.S. buys no EVs, steel, or semiconductors from China, deeming these tariffs more symbolic than economically meaningful. The result has been a formulaic approach to countering China in advanced manufacturing (semiconductors, solar, batteries, etc.) by implementing industrial policy here in the U.S. and levying tariffs in effect to protect the value of the subsidies being issued.1
Navigating Today’s Market Volatility
Every investor understands the dread and anxiety of watching their investments take a turn when the market is red.
However, there are ways you can minimize the worst impacts of a volatile market. In our newest guide, ‘The Do’s and Don’ts of Stock Market Volatility’ we provide recommendations for investors, based on 30 years of expertise. We also explore:
• Three best practices to successfully manage periods of market volatility
• Three of the most common mistakes investors make, and why they are so damaging to your long-term investing goals
• Historical data that supports our conclusions and underscores the recommendations we propose
If you have $500,000 or more to invest, get our free guide today!
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Consumers Sour on the U.S. Economy in May – After a few months of improving sentiment, Americans are starting to feel down on the economy again. The University of Michigan Index of Consumer Sentiment fell to a six-month low in May, with respondents citing higher gas prices, stubborn interest rates, and inflation as ongoing concerns. The souring of sentiment led to the biggest drop for the Consumer Sentiment index since 2021, with some analysts positing that weakening sentiment was causing a pullback in spending—April’s retail sales were flat. We would caution against assigning causation between sentiment and retail spending, however, as spending decisions are more closely tied to wages and prices.3
Could the U.K. be Poised to Hit 2% Inflation This Month? For the majority of 2022 and 2023, the U.K. was something of an outlier when it came to inflation. At its peak in October 2022, inflation had reached 11% year-over-year, and for some time had been falling at a slower pace than other developed economies like the U.S. The setup looks much different today. The U.K.’s latest inflation print came in at 3.2%, and many economists believe that U.K. inflation will fall below 2% in April, bringing it back within the Bank of England’s target. ‘Fueling’ the declines is a 12% decrease in the cap on household electricity and gas bills, which may obfuscate underlying inflationary pressures that remain in the services sector—which is projected to be 5.5% year-over-year. The Bank of England is likely to consider higher core and services’ inflation, so we would not expect a rush to cut rates, even if inflation does indeed come back below target.4
Worried About Your Portfolio’s Progress in Today’s Market? When the market shifts unfavorably, some investors panic and sell off their assets.
While you can’t entirely avoid market volatility, there are strategies to help mitigate its most severe effects. Get our recommendations for investors by downloading our free guide, ‘The Do’s and Don’ts of Stock Market Volatility. We explore:
• Three best practices to successfully manage periods of market volatility
• Three of the most common mistakes investors make, and why they are so damaging to your long-term investing goals
• Historical data that supports our conclusions and underscores the recommendations we propose
If you have $500,000 or more to invest, get our free guide today!
Download Your Copy Today: The Do’s and Don’ts of Stock Market Volatility5
Disclosure