00:00U.S. stocks rallied while bonds extended losses after the Supreme Court ruled that President
00:05Trump has overstepped his authority to use an emergency powers law to impose global tariffs.
00:10The removal of tariffs leaves a hole in public finances that by today likely exceeds $170
00:16billion, according to Bloomberg Economics. It includes levies on China, Mexico, Canada,
00:22and all the Liberation Day charges announced in April. The Treasury Department will now
00:26have to scramble to sell a lot more bonds to bridge the gap, and those fiscal concerns are
00:31putting upward pressure on Treasury yields. The court did not address the eligibility of tariff
00:36refunds, another thorny issue, leaving it to the lower courts, but that's another risk
00:41haunting Treasuries. At the same time, this is a big win for stocks. The tariff overturn lifts the
00:47overhangs over earnings while boosting the prospects for growth. While companies have found ways to
00:53mitigate the tariff impact, several studies have now found that most of the economic burden
00:58is still borne by the U.S. And that goes a long way to explain why U.S. stocks have
01:03lacked global
01:03fears so heavily since last year. However, despite today's optimism, this does not mark the end of
01:10tariffs, as it is widely expected that the White House seeks alternative avenues to restore them.
01:16That in itself risks opening another can of worms, and that risks unsettling markets at the time
01:21when risk sentiment is still fragile. If there is one certainty, that's a rise in volatility.
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