Market Briefing For Monday, Feb. 23

The 'sweeping rebuke' by SCOTUS of the Administration's tariff policy (6-3 decision) leaves open the question of other mechanisms or processes that take time and throw a lot in abeyance for the moment. Probably insufficient to throw the markets into the chaos of the original 'tariff panic', but complicating earnings / revenue projections for the major importers. Reaction muted early on Friday; then got more choppy after Trump speculated on what he can do.

Serious practical consequences have not been addressed by the Court. Such as refunds of collected tariffs; in the hundreds of Billions that conceivably may have to be 'repaid' by the Government. Massive question is: companies likely will be scrambling to demand money back; since tariffs were paid by importing companies; not originating countries or exporters, contrary to some claims. Of course 'if' Trump is able to impose similar under different referenced statutes, than perhaps not so much in terms of revenue or potential refund(s) impact.

So, use of particular 'statute sections' referenced in President Trump's Press Briefing Friday afternoon, sort of implied 'little change' of tariff 'collections', but he also talked of a 10% global tariff, so hard to ascertain the impact of all this.

The President will 'probably' not be able to make snap decisions on tariffs; but he will want to address the ability to impede Chinese undercutting, or at least have a plan about this, before he travels to China next month. I can't assess it all and won't try. Let the economists and political debaters assume that task. I am confident the Sunday talk-shows will be dominated by this; and of course a lot of speculation about what comes next (or not) with regard to Iran, given a massive deployment like we've embarked on usually precedes 'actual action'.

Market X-ray: Presidential frustration over SCOTUS decision nullifying most global tariffs, did not extend to stocks; actually slightly relieved at the prospect of throwing responsibility of tariffs (agree with them or not) to the Congress. It was choppy and absolutely alternating mixed reactions most of the afternoon.

The implications are not explored here; nor entirely clear ... yet. Retailers and a few most-impacted by tariffs, including Apple, moved up on the news; but in some cases such stocks fluctuated thereafter, when it seemed most policies won't 'really' change yet, 'if' POTUS can utilize other tariff-sustaining statutes.

Yes it's a big debate politically; many securities not unhappy to have validity to the argument that such taxing authority was not within the POTUS breadth of authority that the President had claimed. Again not my view but the SCOTUS. And now we see if the regulatory authority to impose tariffs can simply move to other statutes on which the Supreme Court has implied no opinion on at all.

In many cases Friday was about 'market makers & option writers' trying to hold stocks below strike levels where the highest Open Interest in Calls remained. They were generally successful in doing that; probably helped by the chaos of the SCOTUS decision and turmoil with unknown future tariff ramifications outlined or assumptions by POTUS. So we just don't know; sort of an exasperated daily feeling. Next week will be clearer after Options Expiration; but we have to contend with what 'really' is coming with tariffs, State of the (Dis)Union Address, and issues revolving around Iran. The 10% global tariff has nuances that are wins for 'certain' countries ... or until new authorities kick in (where applicable); and clearly ... who knows. (If a given tariff rate was 'set', those tariffs all adjust to 10% regardless of prior level, at least for now. That is a 'win' for now, for companies so-involved. I think I've had enough of this for now; you probably as well; and I'll not try to assess how this chaos applies to individual tickers; mixed-to-heavy-chop.) 

So we go into a 'military weekend' with 'Executive Overreach' on tariffs being the primary discussion; as legislation does provide for refunds in some cases. How to draw the line between Congressional Authority and vague Presidential assumptions about sweeping powers no President has, is interesting; while as to our stock selections, most are not impacted by this issue at all; aside from of course any sweeping move of the broader market which briefly shuffles all.

The 'Statute' underlying all this does permit embargoes nevertheless; so this was a way to raise money without going to Congress; but also doesn't inhibit National Security (related) trade restraints (such as sanctions).. primarily it's a rebuke to broad tariffs that impacted countries with which the United States in some cases actually had a trade 'surplus'.. hence punishing them for what? At the same time all it did was make their products more expensive to importers.

You can all argue what you wish about the logic of it all; but this was SCOTUS decision; so that's that. I think most expected this 'decision', and projections in terms of Earnings for big companies this year is possibly complicated more so than assisted somewhat; but that's for individual companies to sort-out; and at this point they really can't, because of the uncertainty of using other statutes.

I suspect that Congress will attempt to move or modify laws to assist Trump's goals, while some Republicans do quietly disdain all ideas of sweeping tariffs. And perhaps just using other justification will be sufficient to keep them on, in which case all this discussion and media chatter is an exercise in futility; but if we are to respect the Supreme Court; this requires some degree of attention.

Bottom-line: minimal market day with February Options Expiration. However maximal market day with regard to SCOTUS tariff decision and of subsequent Trump criticism and implied variations of responses with 'other statutes' and a 'global tariff'. Most companies had enough pricing power to make money this year and last if you noticed, and did so despite the confounding tariff issues.

We'll see if other counterproductive rulings or tax implications follow on or not. Too soon to tell. It does suggest the Court's not completely politicized; given it stood with 'rule of law'; regardless of Administration bashing of some Justices.

Aside encouragement (or not) about the Court's decision; this does put 'trade' in a bigger spotlight, as President Trump indicated at 'Governors Breakfast' Friday his view of it 'disgraceful of what the Court has done'... alright; but he also affirmed his plans to travel to China from March 31-April 2 for meeting with counterpart Xi Jinping... navigating their trade relationship matters a lot in view of China's mixed economic situation; importance of trade with the US as even greater now; or perhaps a key deterrent to navigating the Taiwan issue in a forceful way.

However 'if' China sent top-secret air-defense weaponry to Iran, that possibly is going to contribute sour notes to move forward with talks. It's possible some geopolitical observers view Venezuela as a rehearsal for strikes on Iran; and conceivable China views Iran as preliminary to Taiwan conflict. Contemplate.

Early in the new week we'll see a broader reflection on the tariff decision; how mixed the implications are (such as not applying to some Canada restrictions) and perhaps some equity movement related to post-Expiration assignments.

As to Iran... forces deployed, essentially the 'trigger is cocked' and there is a lot of temptation when so much power is gathered, to 'pull the trigger' unless a serious deal is made and major concessions by the despots running Tehran.

No sense dwelling more on the confounding alternatives short-term.