Beware of US Supreme Court Ruling on Tariffs

🚨 Friday's ruling by the Supreme Court on the legality of US tariffs could have a sharp but short-lived impact on stocks, bonds and even gold. I've read several simplified scenario analysis to the consequences of the ruling, but if you're day trading then you must be aware of the legal nuances the Trump administration can adopt. A ruling against the tariffs likely boost stocks by removing the burden on companies to "eat" the tariffs or to "absorb" any increase to the retail price. Consumers stocks will also likely gain. But there are other points worth noting. See below the image for more details.

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✅ Stocks of companies largely dependent on imported goods may benefit from a ruling against the tariffs. 

✅ US govt bond prices may decline (yields rise) because any tariffs removal is considered stimulatory to consumers and the economy. This may weaken the case for Fed rate cuts, while exacerbating the Federal deficit via restricting tariffs revenues. 

✅ A rise in bond yields may cause a sharp but shortlived decline in gold. 

🚨 If the Supreme Court rules against the legality of the tariffs, the ruling could be neutralised by the Trump Administration under Section 232 of the Trade Expansion Act of 1962 and other articles granting the US President the authority to impose taxes and duties.

Imagine the market's reaction to the initial ruling and to the follow-up reply from the Oval Office. Do you really think the ruling will take part during market hours?

Careful.