ACTV - Weekly Market Pulse: Time Out

2025-06-02 04:58:00 ET

Summary

• European stocks have been the main beneficiary of President Trump’s economic agenda. Eurozone stocks are up 19.1% since election day and 20.4% since the inauguration.
• President Trump’s trade war has, so far, been nothing but a lot of noise. I suppose we can say the same about his Big Beautiful Bill too.
• The dollar remains in a short-term downtrend and interest rates continue to trade in the range they’ve been in for almost 3 years. The yield today is just 8 basis points higher than it was in October 2022.
• It was an up week for stocks but REITs were actually the best-performing asset class. REITs perform best when interest rates are falling and rates were down last week, although not by a lot.

The tariff rollercoaster continues. This week, most of President Trump’s tariffs were ruled to be outside the scope of the law he used to impose them. I was not surprised in the least because, as I wrote a few weeks ago, I actually took the time to read the International Emergency Economic Powers Act and the word tariff doesn’t even appear, anywhere in the text of the law. It details a number of things the President can do, such as impose sanctions, and the conditions under which he can do them, but tariffs are not one of the allowed actions. The ruling by the U.S. Court of International Trade is detailed and specific and rules that the Trump tariffs are illegal:

Underlying the issues in this case is the notion that “the powers properly belonging to one of the departments ought not to be directly and completely administered by either of the other departments.” Federalist No. 48 (James Madison). Because of the Constitution’s express allocation of the tariff power to Congress, see U.S. Const. art. I, § 8, cl. 1, we do not read IEEPA to delegate an unbounded tariff authority to the President . We instead read IEEPA’s provisions to impose meaningful limits on any such authority it confers . Two are relevant here. First, § 1702’s delegation of a power to “regulate . . . importation,” read in light of its legislative history and Congress’s enactment of more narrow, non-emergency legislation, at the very least does not authorize the President to impose unbounded tariffs . The Worldwide and Retaliatory Tariffs lack any identifiable limits and thus fall outside the scope of § 1702. Second, IEEPA’s limited authorities may be exercised only to “deal with an unusual and extraordinary threat with respect to which a national emergency has been declared . . . and may not be exercised for any other purpose.” 50 U.S.C. § 1701(b) (emphasis added). As the Trafficking Tariffs do not meet that condition, they fall outside the scope of § 1701.

For further details see: