The world gets to vote every business day on what it considers the outlook for just about any economic variable. As far as its assessment of the US, there are three vectors commonly used: the stock market (which is also, historically, the most powerful leading indicator of the domestic economy); the bond market and the currency.
The results, from the beginning of 2025 through now–
Treasuries: the yield on one-month T-bills is down by 10 basis points, at 4.35%; the 10-year is down by 15 bp, at 4.42%; the 30-year, which I think is less important, is up by 12bp at 4.91%.
the dollar: on a trade-weighted basis, the dollar is down by about 8% ytd. Not exactly a sign of confidence. The euro and the yen are among the biggest gainers, the Mexican peso and the Canadian $ not so much
stocks: the EAFE (Europe, Australia and the Far East) index is up in dollar terms by 6.4% ytd
the S&P 500 is down in early trading by 10.5%
NASDAQ is down by 15.9%
importantly, the Russell 2000, comprised of smaller, US-centric companies, is down by 16.3%.
If you were an EU- or Japan-based investor and concentrated on smaller US-based companies strongly tied to the US economy, you’d have lost close to a quarter of your money in less than four months. The same if you bet on NASDAQ.
my guesstimates:
–maybe 2/3 of the losses from holding US stocks this year comes from the proposed tariffs. Whatever the number is, this should be the largest loss component
–we are obviously no longer that “shining city upon a hill” where the doors are open to all. To make up a number, hostility toward immigrants probably cuts the (anemic) growth of the domestic workforce in half, leaving the US pretty much in no better than a very low gear as far as GDP growth goes. Is this another 15% of the losses?
–what’s left, 10%, I’d attribute to the lack of any effective opposition to the White House in Congress.