Yesterday President Trump surprised many of his own advisors when he announced that he would impose steel tariffs of 25% and aluminum tariffs of 10% on national security grounds. There are rumors that his top economic advisor Gary Cohn is so unhappy with the decision that he is on the brink of leaving the White House. The market voted a thumbs down on the decision as the Dow fell close to 1000 points before closing some of the gap on Friday. While the tariffs aren't yet finalized, many of our trading partners from Canada to Germany are seeking exemptions so it isn't yet clear how this will play out. If it is a broad based tariff, it would likely cause ripple effects in global trade and the end result is higher inflation.
Buffett: huge tax cut isn’t baked into market
Warren Buffett believes that the corporate tax reform is very bullish for the US stock market, and more importantly, isn't fully priced in to stock prices.
“The tax act is a huge factor in valuation,” he said on CNBC's “Squawk Box” on Wednesday. “You had this major change in the silent stock holder in American business who has been content with 35 percent… and now instead of getting 35 percent interest in the earnings they get a 21 percent and that makes the remaining stock more valuable.”