Riding the Rally, But Watch for Trade Risks

Markets continue to hover near all-time highs, with the S&P 500 up roughly 26% since its April 8 low. That date marked the day before President Trump announced a 90-day pause on tariffs—a move that has since been extended through August 1. Despite lingering uncertainties, investors have largely shrugged off near-term risks, and optimism is evident: CNN’s Fear & Greed Index recently reached its highest level in over a year. That sentiment raises a classic question—should investors grow cautious when others are greedy? While we don’t see this as a signal to sell, it is a reminder to stay aware of how far markets have run and the vulnerabilities that may lie ahead if trade tensions resurface.   Tariffs: Who’s Paying the Price? A key issue we’re watching is who’s ultimately footing the bill for rising tariff revenues. If consumers bear the cost, we may see additional inflationary pressure—something that could further strain households already impacted by higher interest rates. If corporations absorb the costs instead, profit margins could decline, potentially weighing on stock valuations.  This question becomes even more relevant as we await the June Consumer Price Index (CPI) report this week and the kickoff of earnings season, beginning with major banks. These updates may offer insight into how tariffs are impacting both inflation and corporate earnings. A Fiscal Boost, But Not a Silver Bullet Last week’s passage of the much-discussed “Big Beautiful Bill” is expected to offer some economic support, though perhaps not to the same extent as the 2017 Tax Cuts and Jobs Act. Still, it’s a noteworthy development that could help offset some headwinds. It’s important to understand the magnitude of the potential impact of tariffs: the U.S. imports roughly $3.3 trillion in goods annually. A universal 10% tariff would bring in about $330 billion in revenue, while a 15% effective tariff rate could generate $500 billion—essentially doubling what corporations currently pay in taxes. This underscores why identifying who is absorbing these costs—consumers or companies—is crucial for assessing the economic and market outlook. If you have any questions about how these developments might affect your portfolio, please reach out to your financial advisor. Transcription Available Here: https://www.epwealth.com/transcript-t...EP Wealth Advisors, LLC (“EP Wealth”) is a leading independent registered investment adviser (“RIA”) on a mission to provide clients with honest and objective advice through personalized financial planning, customized investment portfolios, and integrated tax and estate planning.Video Transcripts are provided for information purposes only. Accuracy is not guaranteed. The technology used to generate transcripts may result in omissions, misinterpretations, or other errors. EP Wealth Advisors, LLC is not responsible for discrepancies between the transcript and the original video content.Subscribe to our blog & Market Insights for more wealth management tips: https://www.epwealth.com/weekly-marke...https://www.epwealth.com/blog