Another tariff thought/Sentiment/Higher rates still matter/Earnings/Overseas stuff

I want to start by again commenting on tariffs and the use of them. One of the main rationalizations is the belief that it doesn't cause inflation because it is just a one time price adjustment. Yes, theoretically. The flaw I believe in this argument is if tariffs are successful in reshoring overseas production to the US (which does have obvious benefits), it is at the cost of a higher cost of doing business in the US in an ongoing fashion. And if the cost of the product being produced in the US instead of overseas becomes too expensive to buy relative to what it was, maybe the 'obvious benefits' go away.

I will also say this, for the sake of business certainty and visibility, particularly for small businesses, figure out what you're doing with tariffs as quickly as possible because right now it's just a giant global cloud overhead that has businesses around the world on edge about.

With the inauguration of Trump and the lift in stocks, AAII today saw an 18 pt jump in Bulls to 43.4, a 7 week high. Bears fell by 11.2 pts to 29.4. Investors Intelligence yesterday said Bulls rose almost 3 pts w/o/w to 45.2 while Bears fell to 30.6 from 32.2. I would expect after the record close yesterday that next week we'll see a much wider II Bull/Bear spread. Bottom line, the uber bullishness seen in these figures in December was the perfect contrarian set up for a pullback and that is exactly what we got. Then the notably drop in Bulls and rise in Bears after the stock drop became a great set up for a bounce. It's amazing how well sometimes sentiment levels are good predictors of market moves because people love to chase the rallies and fear the declines.

As I pile through more earnings calls and press releases, I still see an overall mixed economy that is benefiting for sure from higher income spending, the incredibly huge generative AI buildout and anything touching government spending/incentives largess. That said, there has been a definite lift in overall business sentiment with Trump 2.0.

Higher for longer interest rates still really matters for commercial real estate construction decisions. The December Architectural Billings Index for December fell sharply to 44.1 from 49.6 with all four main categories lower, particularly multi family residential which dropped to 46.5 from 50.8. They said "While there are signs that the design cycle was bottoming out in the fourth quarter, the December reading indicated a step back. There remains considerable uncertainty as to the feasibility of many planned construction projects, so the wait-and-see period is extending into 2025."

Ally Financial rose 4% after numbers. With a consumer finance business, an important company to watch: