US President Donald Trump said on July 5 that he had signed letters to 12 countries detailing the tariff levels they could face on goods exported to the United States. These “take it or leave it” offers are expected to be sent out on Monday, July 7.
Back in April, Trump had proposed a base tariff of 10% on most imports, with additional duties for some countries that could go as high as 50%, fuelling concerns of a global trade war and unsettling financial markets.Matthews noted that Imported goods make up just 10% of the US consumer spending basket, adding that “Housing, transportation, health care, insurance, education, all those things have much bigger weights.”
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Matthews cited five instances since 1950 when the S&P 500 dropped in quarter one and gained over 10% in quarter two. “In all five of those, 12 months later, the stock market was higher,” he said. He also mentioned a recent technical signal known as the Golden Cross, which has historically led to gains in the S&P 500 in 22 out of 25 cases over the next year.
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As for India, Matthews said US imports have little bearing on its economic outlook. What drives the Indian economy is its domestic consumption and the focus should be on earnings as we advance.
For the full interview, watch the accompanying video
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