Hedgie's Market Edge - June 23, 2025

🦔 Welcome back to another week of translating Wall Street's complex moves into plain English! This week gave us a perfect example of how markets can face multiple crosscurrents at once. We got encouraging news on trade tensions cooling down, but then Sunday's US strikes on Iranian nuclear facilities reminded everyone that geopolitical risks are very real and can change everything overnight.

The S&P 500 had jumped 4.6% during the week on trade optimism, but futures dropped Sunday night as oil spiked following the Iran strikes. It's a reminder that in today's interconnected world, your portfolio can be affected by both tariff negotiations and Middle East tensions on the same weekend.

TRADE UNCERTAINTY FINALLY SHOWING CRACKS

After months of escalating tariff threats that had markets on edge, we're seeing the first real signs that cooler heads might prevail. The administration is reportedly considering cutting tariffs on Chinese imports, and China is looking at exempting some US goods from their retaliatory measures.

Trade Development Scorecard: 

• 90-day pause on new tariffs was the first olive branch

• Reports suggest administration wants to "de-escalate tensions"

• Treasury Secretary Bessent called US-South Korea talks "very successful"

• "Significant progress" mentioned on potential India trade deal

• Trade policy uncertainty index has dropped since April 9

The reality is simple: nobody wins a full-scale trade war. The original tariff plan would have pushed average rates from 2.5% to over 20%, which would hammer both consumers and businesses. Even under the scaled-back scenario economists are now modeling (10% universal tariff), GDP growth would slow to 1.5-1.7%, well below trend.