While the world obsesses over exactly what will happen next week when the tariffs come back into play after their 90-day pause (on July 9), and on what will turn out to actually be in the fine print of the big budget bill that the House sent to President Trump for his signature today, we also got an employment report this morning that was a little stronger than expected, particularly given how many big companies have talked about layoffs… so we’re also still in a state of uncertainty over unemployment, which is still very low at 4.1%, and that changes everyones guesswork about when the Federal Reserve might cut short-term interest rates. Inflation has been coming down, but the Fed and others are worried about the impact of tariff uncertainty on inflation later in the year, as the tariffs work through the supply chain, so some were hoping that a worsening employment picture would push the Fed to cut rates sooner… but, for this month at least, the employment picture is not worsening, so presumably President Trump will yell at Fed Chair Jerome Powell some more, but he probably still won’t agree to an urgent rate cut.
Everyone except retirees and savers craves lower interest rates, of course, especially the biggest borrower in the world (that would be the US government), so that hoped-for rate cut is the next thing that might keep the market rising. Now that we’re pretty close to being back to what have historically been peak valuations in the stock market, we might need another tariff “TACO” pause or a rate cut to keep boosting animal spirits and push the market much higher this summer, but we’ll see. Investors do not seem worried about much today… but earnings season is just about to begin, with the first wave of big companies beginning to report late next week, so with tariff news and earnings updates the story might change quite a bit as we ease into what used to be the summer doldrums.
While we rest up for earnings season, and prepare to enjoy Independence Day tomorrow, let’s check in on a few other stories from the Real Money Portfolio… I think the most interesting and unpredictable tale has been the sentiment swing for the two big “catalysts” at Burford Capital.
Burford Capital (BUR) is the world’s largest publicly traded litigation finance company, which means they essentially …
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