The Fog of Tariffs

The big things you need to know:

• First, earnings sentiment is at an important crossroads, with the rate of upward EPS estimate revisions having fallen to 30%.
• Second, what we read in S&P 500 earnings call transcripts last week keeps us in the camp that recession is not a foregone conclusion, makes us concerned that any adverse impacts from tariffs may be felt a little later in the year or even next year, and pushes us toward the idea that the consumer is holding up but still hasn’t been unscathed.
• Third, the idea that investors are rotating out of the US assets into other geographies is supported by recent funds flows data.