The Spread Thread

S&P 500 Is the market overvalued or in a bubble? Contrary to consensus - no. If analysts are correct and margins expand to 15.5% by 2027 (+180 bps), then multiples remain more likely to expand than contract. Less cyclical index composition + higher margins = rising multiples.

$SPY -0.7% in the last month $KRE $XRT $XHB smoked Mid-caps down 5%. Few talking about that.

Kieran is possibly the best PM on credit I have ever met. Not a punter or big short guy just great all the time. Worth understanding this post

The US labor market is not as bad as fintwit is making it out to be because of one NFP print.

Seems like Trump can use various other measures to reinstitute the tariffs while appealing IEEPA all the way to supreme court, per GS 4. The Trump administration has other authorities it can use to impose tariffs similar to those the court struck down: The administration could quickly replace the 10% across-the-board tariff with a similar tariff of up to 15% under Sec. 122. Those tariffs would last for only up to 150 days, after which the law requires Congressional action to extend (the law is not clear on whether the period could end after 150 days and then quickly restart again). Sec. 122 authorizes the President to address a balance of payments deficit or to prevent an imminent and significant depreciation in the dollar, but it does not require any formal investigation or process, so the administration could theoretically replace the current 10% tariff with a Sec. 122-based tariff within days if deemed necessary. The US Trade Representative could quickly launch Sec. 301 investigations on key trading partners, laying the procedural groundwork for tariffs after the investigation is complete. This would take longer, likely several weeks at a minimum and probably a few months to complete several investigations. There is no limit on the level or duration of tariffs under Sec. 301. Sec. 232 tariffs, which President Trump has already used for steel, aluminum, and autos, could be broadened to cover other sectors. We already expect additional sectoral tariffs (pharmaceuticals, semiconductors/electronics, etc) and uncertainty regarding the IEEPA-based tariffs could lead the White House to put more emphasis on sectoral tariffs, where there is much less legal uncertainty. President Trump has not emphasized sectoral tariffs as frequently lately as he did earlier this year, but if the White House finds it has less flexibility on country-focused tariffs, sectoral tariffs might receive more attention again. Sec. 338 of the Trade Act of 1930 allows the President to impose tariffs of up to 50% on imports from countries that discriminate against the US. This authority, which has never been used, is similar to the authority under Sec. 301, except that it limits the amount of the tariffs but does not require a formal investigation. 5. As it seems unlikely that the administration could win an appeal in the 10 days it has under the CIT order to remove the tariffs, we would expect the White House to announce a similar across-the-board tariff using Sec. 122. This would then provide the administration time to launch a series of Sec. 301 cases against larger trading partners, potentially opening the door to imposing tariffs higher than 10% in some cases. However, it seems unlikely that the administration could complete Sec. 301 investigations on every US trading partner within the next several months. If the court’s ruling against the IEEPA-based tariffs remains in effect, this could mean that smaller trading partners and/or countries with smaller trade surpluses with the US might not face a baseline tariff when Sec. 122 tariffs roll off after 150 days (assuming the Trump administration cannot find a legal means to extend them).