Mike Zigmont Mike Zigmont, author of the Zigmont Report, is a partner at New York-based Harvest Volatility Management, a hedge fund with over $10B AUM, offering volatility management solutions to its investor base worldwide. Mike has been publishing his daily newsletter (Monday-Friday) privately for the firm’s investors and his personal contacts in the investment business

since 2008, sending it daily shortly after the market close.

The opinions expressed below are my own

Tariffs. Jerome Powell’s testimony was the event we anticipated. Trump’s tariff comments were not. The market was flat early on and Powell’s testimony was essentially the same as

Tuesday’s

. The market weakened slightly over the bulk of the day but accelerated once President Trump stated that he would implement 25% tariffs on steel imports and 10% tariffs on aluminum imports. They are expected to go into effect next week.

The direct impact of these tariffs are likely to be small but the market is concerned about reciprocity and potential trade wars. Even setting those Doomsday fears aside, Trump has just thrown the market a curveball. The idea that the Trump administration will be completely friendly to business and economic growth has be altered.

Granted, Trump is claiming these tariffs are intended to level the steel and aluminum playing field, so the Admin’s argument is that this action is business friendly. We shall see whether the outcome actually turns out that way or not.

The most important takeaway to today is simply that the future is not as smooth and rosy as one assumed yesterday.

The market also learned a different but related lesson today:

  • Trump’s bluster cannot be discounted so significantly anymore
He’s been threatening tariffs for a long time. The fact that it’s happening *

shouldn’t

* be surprising investors… and yet it did. This is because investors have assumed that they could ignore Trump’s talk. That is no longer true. If Trump says something, investors must figure out how much of what he says *

could

* come to fruition. It’s no longer tenable to throw his words out. To me, that’s a bigger deal than steel and aluminum tariffs. I also think the market was nuts for ignoring the President along the way. How can investors ignore what *

the President of The United States of America

* says? Shame on them for cherry-picking what they wanted to hear.

You have to pay attention to both the good and the bad.

Lesson learned, I hope.

See you

tomorrow

,

-Mike