The optimist would argue that the scaremongers of trade tariffs were badly mistaken. Investors cannot be fooled, and the relentless march north in equities is a clear sign that reducing trade deficits does not harm the economy. A more nuanced approach would be to assert that what matters is not what the U.S. President says but what he does.
The indefatigable US investor was rather teed up another swing at equities this morning by the US CPI report produced on Friday. Both the headline and core US inflation numbers came in at 3 percent, being under the predicted 3.1 percent for the pair.
No one, including investors, is immune to recency and present bias. Humans tend to place more weight on current events than on past ones, or to settle for immediate rewards rather than wait for larger ones in the future. The former can cloud our judgment and impede rational decision-making, while the latter, called time-inconsistent preference in economic terms, can be viewed as a plausible synonym for headline trading.
Copyright © 2025 TP ICAP