To The Moon

$United States Copper Index Fund(CPER)$ $Spdr S&P Pharmaceuticals Etf(XPH)$ $SPDR S&P 500 ETF Trust(SPY)$ 📉🌎 TACO Tuesday’s High Stakes: Copper, Chaos, and the Return of the Tariff Trap 🌎📉🔥 I’m calling it what it is: theatre with consequences. On 09Jul25, markets absorbed a tariff-laden Oval Office monologue from President Trump that would’ve rattled history books, but not the S&P 500. With 50% duties floated on copper and 200% on pharma imports, this week’s so-called “TACO Tuesday” echoed the Smoot-Hawley echoes of the 1930s, yet equity markets barely blinked. The S&P closed down just 0.07%, precisely where it sat before the July 4 break. But don’t confuse calm with safety. Beneath the surface, copper screamed historic volatility, pharma rerated instantly, and policy risk lurched from noise to signal. 📊 Tariffs at Century Highs? A Dangerous Flashback to Smoot-Hawley If these levies go into effect as threatened, we’re looking at an effective tariff rate near 20%, the highest since the 1930s. The first chart from Deutsche Bank shows just how extreme this would be: retracing a full century of liberalised trade policy in a matter of weeks. This isn’t campaign noise anymore. A hard August 1 deadline is looming, and there’s no guarantee of another reprieve. If other countries land at the April 2 levels, the system could snap back to William McKinley-era isolationism. 🗳️ The TACO Doctrine: Trump Always Chickens Out? Traders are betting he won’t follow through. According to a Barclays poll, over 80% believe the effective tariff rate will settle between 10% and 18%, implying a partial climbdown. That confidence rests on a repeat performance of the now-infamous “Trump Put,” his tendency to reverse course when markets wobble or bond yields spike. But this time, the White House seems emboldened. Bond yields are stable, inflation expectations have cooled, and the dollar is firm. With consumer inflation forecasts returning to the Fed’s 3% ceiling, the political cost of tariffs has diminished. 📈 Copper’s Historic Move: When Talk Becomes Price Copper futures surged over 10%, the biggest daily spike since 2008, immediately after Trump’s Oval Office comments. That alone is a flashing warning light. Whether or not tariffs ever materialise, the market treated his rhetoric as real. Chart attached shows the daily percentage change in copper, with Tuesday’s move standing like a monolith. The pharma sector reacted similarly. As shown in chart four, S&P Pharma stocks dropped instantly following the tariff remarks, only partially recovering by session end. These are not speculative assets. They’re core global sectors, re-rated in minutes. 🧠 Performative Politics, Real-World Ripples As Viktor Shvets of Macquarie points out, this resembles WWE-style performance more than coordinated economic policy. The bouts look brutal, but they’re mostly scripted. Except, occasionally, someone gets hurt. That’s the risk with tariffs: a big economic injury from a mostly theatrical feud. Trump’s inner circle rotates like a door, and trade policy seems to pivot on who last whispered in his ear. Sir Ivan Rogers calls this policymaking style “opaque by design,” and the lack of institutional guardrails like the WTO only magnifies the uncertainty. Traders can exit in milliseconds, but supply chain managers cannot. 💡 Market Complacency vs Policy Volatility Chart attached shows how TACO Tuesday ended where it began, a flat S&P 500 session that belies the internal stress. Beneath the surface, sectors were scrambling. It’s like watching a duck glide across a pond while paddling furiously below. Chart attached captures that sentiment shift in consumer inflation expectations: the pop seen post-Liberation Day has faded. The bond market’s yip of protest in April that prompted the 90-day pause has been replaced by investor shrugs. But maybe that’s the paradox Bob Elliott nails best. In his Nonconsensus newsletter, he warns that the absence of market pain is giving the administration room to escalate. 📌 “Without market or economic pain feedback, the admin is getting more aggressive.” There’s no recession, no market correction, no bond tantrum. So what’s to stop another round? 🏗️ Real-World Fragility: Why Corporates Can’t Keep Up Dan Wales from Fulcrum Asset Management warns of the long-term fallout: “A flexible tariff world doesn’t help anyone. People need to be able to plan for the prices of goods.” For corporates, that planning horizon is shrinking fast. Every headline, every Oval Office aside resets expectations. With copper at record highs, contractors, manufacturers, and infrastructure players are revising quotes, delaying orders, and hoarding supply. And as chart attached shows, strategist forecasts are chasing price action. Goldman and BofA raised their S&P 500 targets this week despite the tariff turmoil. The market’s climbing a wall of disbelief, with analysts forced to follow. 🎯 Takeaways and Trade Setups 1. Short-term volatility is masked by index-level calm. Traders are cycling sector-by-sector, rotate or risk being blindsided. 2. Copper and pharma are the barometers. They’ve shown the most sensitivity and could offer both short gamma squeeze setups and mean-reversion plays depending on tariff follow-through. 3. Watch for bond yield stress. If yields spike, the Trump Put may activate again, derailing tariff threats. 4. The tariff floor is now structural. Even if Trump moderates, we’re unlikely to return to sub-5% effective rates. This raises long-term costs, suppresses margins, and could dampen global growth. 🔎 What to Watch Ahead • Aug. 1 Tariff Activation: A firm deadline this time? Monitor shipping data, customs leaks, and Capitol Hill briefings for early clues. • Earnings season readthroughs: Will companies guide lower due to input costs or inventory adjustments from tariff noise? • Dollar Strength: If DXY surges due to tariff-related capital flows, expect pressure on multinationals and EM assets. 💥 Contrarian Insight Markets are currently pricing in de-escalation, but they did the same in early 2018 before the first steel and aluminium tariffs. Back then too, copper moved early and equities delayed. This time, the signals are louder, faster, and more globally integrated. The real question is not if tariffs are coming, it’s whether we’ve structurally priced in a chaotic, headline-driven trade regime that might not return to rules-based norms for years. 📢 Don’t miss out! 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