Today, The Weekly Buzzing Stocks by Billy Kawasaki and The Panic-Proof Portfolio (Stockchase Research) commented about whether ARMK-N, LUCK-N, LULU-Q, HBM-T, SM-N, THC-N, ACIC-Q, HRTG-N, SE-N, AR-N, MVIS-Q are stocks to buy or sell.
We'll see what happens, and if the full 25% is applied. With these tariffs, there's always delayed implementation. The US needs our lumber; they can't supply their needs domestically. If tariffs of 25% do get implemented, it'll hurt the US homebuilders who will have to raise prices, and then hurt the entire US housing market.
Tariffs would be like a supply shock. What could happen is stagflation (high inflation, but slowing economic growth) which no one wants.
From a monetary point of view, when there's high inflation central banks start raising interest rates to slow demand. But at the same time this erodes purchasing power, which may slow economic growth and increase unemployment. Usually when unemployment is rising, you cut interest rates. The central banks are dealing with that dilemma right now.
The Fed minutes came out yesterday, and they appear to be in wait-and-see mode. Inflation does appear to be stickier in the US than in Canada, but there's a lot of uncertainty surrounding tariffs. Canada's inflation has come down quite a bit, so our central bank has been cutting rates much more rapidly. The overall US economy is healthier than Canada's.
They're off today, but all indices are near record highs. The S&P 500 reached a new high a couple of days ago. Even the TSX is up 2-3% YTD. This tells her that the financial markets are thinking that tariffs won't be fully implemented. If the tariffs were to be fully implemented, it'll be very bad for the Canadian economy and our stock market will eventually be hit.
So the markets are thinking that the tariff threats are a negotiation tool, but we'll have to see how it all plays out.