Investor Reaction to Doubled Steel and Aluminum Tariffs and Economic Indicators

Investor Reaction to Tariffs

• 📉 Investors showed a mild reaction to the doubling of steel and aluminum tariffs from 25% to 50%, with the market remaining largely flat.
• 💡 This muted response is attributed to investors having anticipated the tariff increase, which was telegraphed by the White House.
• ⚠️ A significant market reaction is expected only with the release of surprising economic data, such as inflation or jobs reports, or a meaningful change in the trade landscape.

Business Impact and Adaptations

• ✈️ Alaska Airlines is canceling 14 flights per day through July due to delaying the acceptance of two regional jets, illustrating a business response to tariff costs.
• 💰 The airline stated they will not accept additional costs imposed by tariffs throughout their supply chain, opting to control controllable costs instead of passing them to customers.

Economic Indicators and Federal Reserve Policy

• 📊 The May ADP private sector jobs report showed only 37,000 jobs added, a significant miss from the expected 110,000, with losses in manufacturing and small businesses.
• 🗣️ This weakening job market, coupled with recent good inflation data, led President Trump to pressure Fed Chair Jerome Powell for interest rate cuts.
• 🏦 The Federal Reserve is hesitant to make immediate moves, citing uncertainty surrounding the impact of tariffs on future prices.

The Beige Book Report

• 📖 The Federal Reserve's Beige Book, released eight times a year, provides an overview of economic conditions across its 12 districts, focusing on inflation, the job market, and the broader economy.
• 🗓️ This report is used in the Fed's interest rate meetings and serves as a key indicator for businesses, consumers, and investors regarding the Fed's potential actions.