In the past two weeks, we’ve stepped through the tailwinds building for stocks, just as we’ve made new record highs in the major indices.

The resumption of the Fed easing cycle is nearing.  The extension of pro-growth tax cuts should be just weeks away.  The Fed has finally acknowledged the liquidity constraints its bank regulations have put on the U.S. Treasury market — and they’ve vowed to relax those constraints, and soon (regulatory relief!).  

Add to all of this, from last week’s NATO meeting we now have an historic structural shift in Western world military spending and alignment.

And the technology revolution continues to advance at a rapid pace.

The question is, could the self-imposed deadline on the 90-day tariff pause introduce another confidence shock?

That said, over the past several months, it has become clear that Trump can turn the dials at will — to manage economic and financial market stability.  And markets now seem to be recognizing that/ pricing it in. 

Add to this, last week’s NATO Summit (the big defense spending commitments) may end up playing a big role in the resolution of tariff negotiations. 

Remember, back in April we talked about Trump’s Chairman of the Council of Economic Advisors — a guy named Stephen Miran.  He wrote a report on “Restructuring the Global Trading System” in November of last year.  A month later, Trump picked him to be his top economist.

This report is the blueprint for leveraging tariff threats, and the United States’ role in global security and financial stability, to extract “burden sharing” from our allies and trading partners. 

In this case, the dollar’s role in the world as the reserve currency provides benefits to the world, and benefits to the U.S. but also drives persistent and unsustainable U.S. trade deficits.

So Miran’s message for trading partners was simple: Share the burden. That means accept tariffs, or… open your markets, spend more on defense, buy more American goods, invest in U.S. manufacturing, and buy our Treasuries.