Switzerland’s economy unexpectedly grew in the second quarter before the country was hit with one of the highest US tariff rates https://t.co/qHXVeVyKrk ...

Oh boy. Treasury Secretary Scott Besson recently did an interview and he says tariff income is going to be over 1% of GDP. I I'd been saying 300 billion, but I think we're going to have to substantially revise that up.So well in excess 1% of GDP. And then with the new investment there, the sovereign investments that we talked about, but then in terms of the committed investment by private industry, we're well over 10 trillion. Regardless, whatever you think about the tariffs, whether they work or don't work ...

Summary of Morgan Stanley Global Macro Forum Call Industry and Company Involved - **Industry**: Global Macro Economics, focusing on US CPI and Asia Tariffs - **Company**: Morgan Stanley Key Points and Arguments US Consumer Price Index (CPI) - Core CPI is expected to rise by 0.32% month-over-month (3.04% year-over-year), up from 0.23% in June, indicating an acceleration in inflation pressures [5][57] - Headline CPI is projected at 0.25% month-over-month (2.76% year-over-year) [5][57] - The increase in core CPI is primarily driven by core goods, with categories exposed to tariffs showing signs of pass-through, while services remain stable [57] Tariff Impact on Asia - US trade-weighted effective tariff rate on imports from Asia has increased significantly to 25%, compared to 5% at the beginning of the year [13][57] - Asian currencies are appreciating in this cycle, contrasting with the previous cycle in 2018-19 [15][57] - The tariff burden on Asian economies is substantial, with initial signs of impact on capital expenditure (capex) cycles [17][57] - Aggregate demand in Asia is likely to have continued to slow down in July, with the PMI remaining in contraction mode [29][31][57] Economic Outlook for Asia - Despite favorable domestic fundamentals in India, external challenges such as China's deflationary pressures and rising tariffs are present [57] - The Reserve Bank of India's easing measures over the past four months have lowered real rates, which should support economic reflation [57] Emerging Markets (EM) and Asia Equities - The rally in EM equities since early April appears to be waning, with valuations at all-time highs and evident downside growth risks [57] - Earnings revision breadth remains negative in EM and has turned down in Japan, indicating potential challenges ahead [35][57] - Historically, August has been the worst month for EM and Japan equities, with September also lagging [44][57] US Equities Outlook - A bullish view for the next 6-12 months is supported by rebounding earnings and cash flow, with the market having already priced in a growth slowdown [57] - Preference remains for sectors such as Industrials and Financials, while Consumer Discretionary is underweight due to tariff pressures [57] - A strong CPI print could lead to quality leadership in equities, while a weaker print may favor small caps and lower-quality stocks [57] Other Important Insights - The uncertainty regarding tariff levels has decreased, but the significant increase in US tariff rates on Asia implies a considerable burden that has not yet been shared by Asian exporters [21][57] - The aggregate US import price from Asia has risen above February 2025 levels, indicating that the tariff impact is being felt [21][57] - The call highlighted the importance of monitoring trade tensions and their effects on both trade and capital expenditure cycles in Asia [25][57]

Trade Tariffs & Manufacturing - Trump's 50% tariff threat could lead to India having the highest tariff rate in Asia [1] - This poses a risk to India's manufacturing sector, which Prime Minister Modi has been developing for a decade to compete with China [1]

Market Volatility & Investment Strategy - Market volatility is expected to return, potentially leading to an asset price explosion in the second half of the year, advising strategic positioning [2][4][6] - Historically, volatility was seen negatively, but now it's part of digitalization and financialization trends [3] - The VIX (Volatility Index) is at its lowest point in 2025, suggesting an imminent increase in market volatility [5] Tariff Revenue & US Investment - Tariff income is projected to exceed 1% of GDP, surpassing the initial estimate of $300 billion [7][8] - Private industry is committing over $10 trillion in investments into the United States [8][9] - The US is gaining advantage in the geopolitical trade realm, potentially disadvantaging those betting against it [10] Geopolitics & Trade Negotiations - The US employs a multi-lever, non-linear strategy in trade negotiations, leveraging military operations, diplomacy, economic sanctions, and oil markets [22][23][28] - Disbanding of the Klepto Task Force and discussions on Arctic routes were potential incentives offered to Russia during negotiations [30][31][32] - Arctic shipping routes are emerging as a significant geopolitical factor, influencing trade and logistics [34][35] Cryptocurrency & Digital Assets - The US government and the Chinese government are among the largest holders of Bitcoin, holding the 3rd and 4th position respectively [40] - China is seriously considering launching a yuan-backed stablecoin, potentially from Hong Kong [42] - Governments recognize the growing demand for digital assets, leading to a complex dynamic between supporting these assets and safeguarding legacy systems [44][45]

Tariff Impact & Inflation - Traditional tariff understanding involves border application, but new trade policies apply tariffs based on goods within goods or raw materials, complicating cost assessment [1][2] - The accumulation of tariff impacts across the global value chain of production leads to earning and inflation shocks [3] - Companies are adjusting pricing decisions based on when and how they understand their costs related to tariffs [3] Supply Chain Dynamics - Cost pressure from suppliers is increasing, leading to appeals for price increases [4] - Customers are using data to negotiate and understand appropriate pricing in response to tariff increases [4] - Tariff impacts are working their way through the supply chain to the end customer and ultimately affecting earnings [4]

It's been a strange year. The US market experienced a chunky correction in reaction to tariff news in February, but has since bounced back to new highs from the April low. What's going on? Why doesn't political havoc seem to matter? https://t.co/QPpBhXxRLq ...

Trade Policy - The US imposed a 39% tariff on Swiss exports [1] - Companies cannot avoid the 39% US tariff by exporting through Liechtenstein [1]

Inflation & Tariffs - Core CPI annualized basis came in a little hotter than expected, at the highest since February [2] - Sequential core inflation and underlying inflation data are showing an uptick after two years of moving closer to the Fed target [3] - Tariff pass-through is having a moderate impact and is likely to grow in the months ahead [3] - Import-sensitive categories like furniture, appliances, and car parts are seeing a shift towards higher inflation [4] Economic Growth & Labor Market - Recent economic data shows some labor market weakening and slowing in economic activity and growth [4] - There are medium-term questions about the effect of tariffs on both inflation and economic growth/employment [4] Consumer Spending & Impact on Working Class - Tariffs disproportionately affect low and moderate-income households [8] - Wage growth is slowing down at the bottom of the income distribution [9] - Consumer spending has been almost flat in the aggregate over the last six months, likely weaker at the bottom of the distribution [9] Healthcare & Student Loans - Premiums for those getting healthcare through Affordable Care Act exchanges will increase, in some cases by 10-20% starting in 2026 [11] - The turning off of the student loan pause is already showing its way in some of the credit score data [12] - There are challenges in the bottom half of the distribution that policymakers will need to be attuned to [13] Data Integrity - It's critical that members of the US Senate interrogate the nominee and press him on whether he can commit to providing credible nonpartisan data completely free from political interference [5] - Business leaders and market participants should make their voices heard about the importance of US economic data being respected [6]

US tariff revenue reached a fresh monthly record in July, though the increase wasn’t enough to prevent a widening in the monthly budget deficit — pointing to the federal government’s continuing fiscal challenges https://t.co/lX9IwemUXp ...