Earnings season begins: Pay attention to all the tariff talk originally appeared on TheStreet.
Updated: 11:15 EDT, Sunday
The second-quarter earnings season is upon us: six weeks to eight weeks of numbers, not to mention company officials gloating or trying to defend their results against angry investors and analysts.
This earning season, like the first-quarter season, will come with a big wildcard: President Donald Trump’s efforts to impose much heavier tariffs on imports to the United States.
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The Administration announced a huge list of tariffs increases on April 2 that shocked so many from the Federal Reserve to Wall Street that the Standard & Poor’s 500 Index fell more than 10% over the next two days.
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The president has proposed 35% tariffs on Canadian goods. And a 50% tariff on Brazil, the world’s largest coffee producer (among other things) unless the Brazil halts prosecution of former Brazilian president Jair Bolsonaro, charging him with organizing a conspiracy to overturn Brazil’s 2022 election.
Over the weekend, Trump threatened 30% tariffs on Mexico and the European Union to take effect on Aug. 1 unless they come to a new deal.
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Sunday, some investors made it known how they feel about big tariffs: They’re pushing stocks lower in futures trading.
Futures in the Dow Jones Industrial Average were down 200 points of 0.5%. S&P 500 futures were also off 29 points or about 0.5%. Nasdaq-100 futures had slid 0.4% or 97 points.
Levels in futures (contracts to buy a basket of stock for delivery later) don’t correspond directly to the live market. They offer, however, a directional view of where the market may be headed. At least until the regular market opens.Â
In the last few months, in fact, futures trading late on Sundays has signaled weak opens for U.S. stocks on many mornings, but retail investors come in and push stocks higher.
Tariffs are a dangerous game. You hear many Wall Streeters predicting the actual tariffs come in at roughly 10%.
Trump learned a small lesson in April when stocks literally started to melt down. The history of draconian tariffs is they usually cause economic mayhem. And the politicians who get them enacted or their parties lose their jobs.
So, in the meantime, the earnings start to come in: 103 in the week ahead and 702 in the week following.
