How Wall Street Is Weathering the Tariff Storm

Mike Wilson, Morgan Stanley's CIO and Chief U.S. Equity Strategist, discusses the resilience of the equity market despite new tariff announcements. He attributes this resilience to several factors: limited import cost exposure for S&P 500 industries due to deferrals and exemptions; the perception that recently announced tariff rates are not final; companies pre-stocking inventory; and a V-shaped rebound in earnings revision breadth. He highlights the positive impact of the "One Big Beautiful Bill," which lowers the cash earnings tax rate for companies investing in R&D and capital goods, potentially boosting capital spending and economic growth. He also mentions the positive effects of reduced digital service taxes. Wilson concludes that while tariff uncertainty remains, positive drivers for earnings growth outweigh potential headwinds, justifying the recent stock market rally.