Trump Makes a Deal With Japan
1. The Trump administration has signed a trade deal with Japan. As part of the deal, Japan will pay a 15% reciprocal tariff and invest $500 billion into the U.S. (Although, it’s likely that American consumers will ultimately foot the bill.)
What’s worth noting is that tariffs are lower than before. This suggests that the alarming rhetoric we heard between February and April may have just been hot air. Yes, tariffs will exist, but they’ll be lower than expected.
That said, the cost of goods for Americans is likely to increase. In reality, it’s Americans who will end up paying for these tariffs.
Dumping Ground…
2. Just thinking out loud here: We know tariffs are going up, and some countries will face more than others.
My view? Some nations might become a dumping ground. Imagine this: Country A faces a 30% tariff from Country C, but has a free trade agreement with Country B, which only faces a 15% tariff from Country C.
Wouldn’t it be cheaper for Country A to route exports through Country B to get to Country C? We’ve already seen this with Mexico, which became a dumping ground for Chinese goods.
Definitely something to watch.
Metals Worth Watching More Closely
3. Copper is now trading above its July 8th move. Don’t be surprised if there’s a bigger upside breakout. A move above $6.00 is looking like a real possibility. Keep in mind, copper is in uncharted territory.
There are still a few days left in July, and silver is making strong strides toward $40. If we get a monthly close at or above $40, we could see fireworks.
Also interesting: the correlation between copper and silver is getting stronger.
Gold is bouncing off slightly. If it moves above $3,500, expect fireworks there too.
Stocks…
4. When it comes to the major indices, there’s just a lot of choppiness. We haven’t had any real direction since early July.
At the same time, we’re seeing wild moves in meme stocks and the most shorted names. This type of behavior often shows up near market tops.
Again, as I’ve said before: Be cautious heading into August–mid-October. Don’t be shocked if there’s a 10–15% correction before markets start climbing again.
That said, markets can change fast. A breakout to the upside could come at any time.
Bitcoin, Nuclear, & More
5. There’s still too much optimism in crypto. Bitcoin tried to break above $120K, but failed to hold.
Meanwhile, the UK approved a $51 billion nuclear plant—a huge move. Nuclear energy is gaining serious momentum, and there’s lots of positive news around it.
The U.S. dollar continues to lag, and yields are cooling off, though they remain elevated.