Morgan Stanley issues warning: Expect to be āfooled many more timesā on tariffs
Tariff-related headlines have roiled stocks since President Donald Trumpās initial surprise rollout, and investors shouldnāt let their guard down, according to Morgan Stanley. āInvestors should prepare to be fooled many more times,ā the firmās strategists led by Matthew Hornbach said in a note to clients titled āFool Me Once, Shame On You. Fool Me Twice, Shame On Me.ā
The article goes on to say:
āAmong the many challenges investors face today, two make navigating markets particularly frustrating: (1) figuring out the US administrationās āmaster planā for trade policy, and (2) predicting how often it may change or flex,ā Morgan Stanley said. The firm pointed out that some interpreted Trumpās call for the Federal Reserve to cut interest rates as his grand plan to offset any negative economic impact. However, it might not work as planned, the firm said. āThe problem with this perceived plan entails the lags with which both monetary and fiscal policy operate relative to those of trade policy changes,ā Morgan Stanley said. āConsumer confidence already cracked ahead of the April 2 reciprocal tariff announcement. The 90-day pause unlikely provides much relief.ā
This last bolded comment is the most damaging to Trump
and this is what is happening: