"The sky was yellow and the sun was blue"/Loan pricing/PMIs/RBA

I'll say again, the political world is really upside down when you have Democrats blasting tariffs which are taxes and you have Republicans embracing them. I'll give another Grateful Dead quote, "The sky was yellow and the sun was blue" from Scarlet Begonias. I know it is more nuanced than that with the possibility that foreigners would pay more of the tariff/tax via product discounts and/or US dollar strength but you get my point.

I am very sympathetic to the reciprocity angle to even out and hopefully lower global tariffs in the aggregate with other countries and I want to see more US manufacturing jobs too but the former is seemingly easier to figure out than the latter in terms of both negotiation and clear results. The latter is a 'fingers crossed' that it works with any results only years in the future. Otherwise, using tariffs mostly just to raise revenue and believing that it will lower the US budget deficit relative to GDP, there is one lesson we should all have learned over MANY decades and that is regardless of tax rates, both high and low, tax revenue as a percent of GDP has averaged about 17%. It is spending where our finances have gone off the rails and where it currently sits at about 24% vs a long term average closer to 20%. Finally, we've likely only seen the beginning of retaliatory tariffs on us if what we see tomorrow is more than just reciprocity. EC President Ursula von der Leyen said today, "We do not necessarily want to retaliate" but, "If necessary we have a strong plan to retaliate and will use it."

Either way, may tomorrow bring whatever tariffs we will see so companies and households can all adjust.

On the global travel side, the impact of tariffs is already here. Air Canada had its annual meeting yesterday and Bloomberg News is reporting that the airline is seeing "a 10% decline in bookings for transborder flights between Canada and the US for the April to September period compared to last year." "Am I concerned?," Chairman Vagn Sorensen said in a response to a question from a shareholder during Monday's meeting. "Yes, definitely, I'm concerned."

The CEO of Accor, the big European based hotel company with a variety of brands across the price spectrum like Fairmont, Delano, Mondrian, Novotel, Raffles, Sofitel, SLS and Swisshol, was on Bloomberg TV today and said vacationers are "deciding to change destination, to go to Canada instead of going to America, to go to South America or Egypt." He said bookings from Europe to the US are down 25% this summer.

While we have a large trade deficit in goods, we have a large surplus when it comes to services, particularly travel.