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1. The end of the TACO trade?

The astonishing rebound in stocks since early April largely reflects investors' bet that U.S. President Donald Trump won't follow through on his tariff threats.

But the market's very resilience may encourage the president to push forward, which could be bad news for equities in both the U.S. and Europe.

With yesterday’s move lower, sentiment turned bearish and could signal that more downside is needed to reach “fear” levels. Technically, the Russell 2000 is pulling back from a key area of support/resistance near 2,300. The Relative Strength Index (RSI) confirmed a divergence, and today’s fall was the largest since May.

2. The US effective tariff rate has risen to 18%.

Economic observers have tried to give us the best picture of the cost of tariffs based on what the Trump administration has implemented. As of the White House's latest summer trade announcements, the US effective tariff rate has risen to 18%, according to estimates by the Yale Budget Lab.

3. US inflation has so far not responded to the tariff’s impact, partly due to soft oil prices.

However, as corporates begin to believe that tariffs are here to stay, they might end up changing tack, and try to pass on some of the cost to the end consumer.

Below: Oil (black) is the leading indicator for US inflation (blue).

Source: JPMorgan

4. $7.4 Trillion is still parked in money market funds, a new all-time high.

5. AI-induced layoffs.

Google, Salesforce, Amazon, and CrowdStrike have all trimmed headcount in recent months, often in the name of AI reorganization or cost discipline. Microsoft is cutting another 9,000 jobs, its third major layoff this year, following 2,000 roles in January and nearly 7,000 in May. That’s ~4% of its global workforce gone, as the company doubles down on its AI pivot.

A recent Deloitte survey found that many corporate boards are targeting up to 20% cost reductions via AI-driven productivity gains, even as CIOs ramp up hiring for AI-specific roles.

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