1. Tariffs haven’t slowed America’s demand for foreign goods.

Many items are just finding new ways into the country—mainly from Mexico.

That seismic shift started in 2018 after then-President Trump signed into law a round of tariffs on many Chinese imports.

This morning, Trump announced he would impose a 25% tariff on Canada and Mexico, a move that could cripple trade and scramble supply chains.

2. US has high valuation and high EPS growth expectations.

Despite the S&P 500’s near-record-high valuations, the consensus view remains that they are justified by the also-high ROE and better growth profile.

Even adjusting for the higher ROE and growth, the market is now pricing that relative growth differential and so that relative strength must be maintained going forward.

3. After underestimating the stock market’s strength over the past two years, Wall Street strategists are back with bullish year-end targets.

Setting an S&P 500 target is a Wall Street ritual, with analysts from big banks to small investment shops doing so at the tern of every calendar year and market watchers following their predictions.

Yet there’s been virtually zero correlation between estimates and what US stocks have actually done, according to a Bloomberg analysis.

4. “Don’t give up on Europe”, says UBS.

They advise investors not to underweight the region in portfolios, despite its poor economic momentum, citing cheap valuations and currency weakness that should support EPS down the line.

UBS also expects the economic growth gap with the US to narrow next year, as interest rates fall. “1% off rates adds 1% to GDP after a year, and the ECB will, on UBS forecasts, cut rates to 2% by June 25.”

Traders have ramped up expectations for a 50 basis-point cut for the ECB’s December meeting, which should put a floor under the market.

5. Morgan Stanley expects EU equities to trade in a range as we await US policy clarity.

“Our base case (+7% LC upside) assumes moderate exposure to tariffs, partial tax breaks on US goods production, limited EPS growth for China-exposed stocks, and a further M&A rebound.”

Their “moderate bear” case is -10% and their “bull” case +22%.

6. Confidence in the market is high, but is it too high?

Leveraged ETFs are flashing warning signs of extreme optimism.

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