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Happy Friday, investors. It was only a couple months ago that sharing bullish views on the stock market would get you buried by the bears on social media. Optimism, however, is increasingly becoming consensus among investors, trade war be damned.

Case in point, the S&P 500 just closed at another record high Thursday and bitcoin hovered near $116,000.

Tariffs who?

Tariffs have done little to curb investors’ risk appetite.

The White House rolled out a series of new tariff announcements this week, yet the S&P 500, Nasdaq, bitcoin, and Nvidia have all notched all-time highs over the last 24 hours.

Meanwhile, the VIX — Wall Street’s fear gauge — has collapsed well below its long-run average after surging to historic highs in April.

There are two ways to interpret markets right now: 

• Investors are so bullish they’re ignoring tariff risks

• Investors don’t believe tariff risks are serious enough to stop buying stocks

Both could be true. Tariffs are indeed in play, but so are animal spirits. 

“Broad market dips seem to be getting continually shallower and shorter, meaning that traders are ever more quickly pivoting toward bargain hunting,” said Steve Sosnick, chief strategist at Interactive Brokers. 

In April, President Trump’s “Liberation Day” trade announcement catalyzed a 19% drawdown in stocks — which was rapidly reversed in a V-shaped bounce over the next 27 trading sessions. 

There’s a strong case for investors to remain bullish, even with elevated uncertainty out of Washington.

During the near-bear market in the second quarter, sentiment turned so negative across the board that the market looked unusually attractive: 

• Put/call ratios spiked

• Equity outflows soared

• Consumer confidence fell below 2008 levels

• Hedge funds were net short to a historic degree

• Global fund managers had slashed exposure to stocks

Altogether, stocks looked like they were having a holiday sale. 

“As General Patton told us many years ago, if everyone is thinking alike, then someone isn’t thinking,” wrote Ryan Detrick and Sonu Varghese of Carson Group in their mid-year market outlook released Thursday. 

The extreme bearishness, in Carson’s view, meant it would only take a little bit of good news to fuel a rebound.

That’s exactly what happened as trade risks moderated and first-quarter earnings surprised to the upside. 

With upbeat expectations for second-quarter earnings ready to be proven right next week, that momentum could continue.

“Market participants have concluded that they can go on increasing their exposure to risk assets,” said David Morrison, senior market analyst at Trade Nation.

“And why not? While there is undoubtedly complacency in the market, and valuations at the top are historically stretched, there are no obvious signs of distress generally.”

Market snapshot

Elsewhere

🏦 A new Fed Chair could still have trouble cutting rates. Even if the new Trump-appointed policy chief wants to flatten interest rates, they will still have to convince the other 11 central bankers on the committee to make it happen. That said, Jerome Powell has said he would have already cut rates if it weren’t for tariffs. (Axios)

📊 Fewer Americans are making new filings for unemployment. In the week to July 5, initial jobless claims unexpectedly fell to 227,000, below estimates for 235,000. Continuing claims rose to 1.97 million, the highest level since November 2021. (Reuters)

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🇨🇦 President Trump announced 35% tariffs on Canada. Goods from the US’ northern neighbor will face the new levy starting August 1, according to a Thursday night post on Truth Social. (Yahoo Finance)

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Rapid-fire

• The White House accused Jerome Powell of mismanaging the Fed, citing a pricey renovation of its HQ (CNBC)

• Delta Air Lines stock rallied double digits as it projected a rosy outlook for the rest of the year (Axios)

• Wells Fargo plans to end its partnership with rent-paying credit card BILT (WSJ)

• MP Materials stock soared 50% after the Pentagon became the largest shareholder in the rare earth miner (CNBC)

• Kellogg shares climbed 30% after Ferrero agreed to buy the cereal maker for $3.1 billion (CNBC)

• Tesla stock climbed Thursday after Elon Musk revealed plans to expand robotaxi services (Barron’s)

• The stock and bond markets disagree about the trajectory of the economy (Opening Bell Daily)

• Bitcoin has appreciated 1096% the last five years and its risk-reward profile is in a class of its own (Pomp Letter)

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Last thing

About me

📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day — unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else.

Feedback? Reply to this email, ping me on X @philrosenn, or write me directly at [email protected].