Welcome to Your Conviction-Light Stock Rally
Earnings forecasts have risen despite the threatened tariffs, but disagreement among analysts is growing.
A foggy outlook.
Photographer: Michael Nagle/Bloomberg
“There are known unknowns,” former Secretary of Defense Donald Rumsfeld mused in a 2002 press briefing in the lead-up to the Iraq War. “But there are also unknown unknowns, the ones we don’t know we don’t know,” he continued. “It is the latter category that tends to be the difficult ones.” The same could now be said about the Trump administration’s burgeoning trade war, and in fact, there are signs that angst about the unknown unknowns is creeping into the outlook for big US companies.
You wouldn’t know it by the looks of the US stock market. The S&P 500 Index is hovering near record highs. And the index’s forward price-earnings ratio is back to its Feb. 19 peak, before the White House’s tariff threats sent stocks tumbling. By all outward appearances, the market no longer seems to care about a trade war.