A market-based Trump overview asset classes rebound as tariffs soften

(The pattern of markets tumbling when Trump unveils tariff policies, only to see stocks rebound when the president softens or pauses his plans, led one Wall Street wag to coin the acronym "TACO" for his policies: "Trump Always Chickens Out" - prompting an angry response by the president in a recent press conference.)

CBOE's S&P 500 volatility index (VIX) has been inversely correlated with the US stock benchmark's performance; we've flipped the Y axis for the S&P 500 to show how close this correlation has been. The volatility spike and market selloff after "Liberation Day" has been followed by a broad return to the previous normal.

Another measure of sentiment is the S&P 500's negative deviation from its medium-term average, which is generally deemed to be a bearish sign. While the benchmark has inched above its 90-day moving average since mid-May, the relatively small gap suggests a sense of cautious optimism as policy uncertainties persist.

In our subsequent charts, we tour even more indicators: net inflows into the US have continued to say flat, likely to the benefit of "safer" European equities; the NYSE's advance/decline and new high/new low stock trackers are also important bellwethers.

We also consider equity flows vs. "risk off" asset classes like Treasury bills and gold, and revisit sentiment indicators that track the media. (Click here for more discussion of the Daily News Sentiment Index and the Economic Policy Uncertainty Index.)

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