Top market watchers say President Trump's tariff actions are aimed at specific areas he's focused on

Trade and Tariffs - Potential new tariffs on the EU and Mexico starting August 1st are being considered, primarily as a negotiating tactic to achieve broader policy goals beyond just trade [1][5] - The market impact of these potential tariffs on European markets has been limited, possibly because investors view them as temporary threats [3] - The shift from free trade to "friend trade" reflects a broader strategy of prioritizing close relationships in global trade [2] Earnings and Market Outlook - Earnings season is approaching, with a positive outlook expected later in the year, potentially boosted by a 10%+ move in the dollar [7] - AI is expected to drive cost reduction and margin improvement for smaller companies, potentially starting next year [8][11] - Tech and communication services are driving most of the earnings growth; without them, overall earnings growth would be negative [9] Investment Opportunities - Smaller value companies outside the Mag 7, trading at 13-14 times earnings, may benefit from AI adoption [11] - In Europe, investment opportunities exist in defense and infrastructure sectors due to increased spending [13][14] - In Asia, tech-oriented markets are preferred over goods-dependent markets due to potential tariff impacts [16][17] Market Valuation - The Mag 7 stocks are trading at approximately 31 times forward earnings, while the rest of the market is just under 21 times [9] - The earnings growth spread between the Mag 7 and the rest of the market is compressing, suggesting potential outperformance of smaller caps [10][11]