CNBC Television
Evercore ISI's Krishna Guha: Supreme Court outcome on tariffs is 50-50
11/5/2025, 4:10:16 PM
Economic Summary
- Equities saw increased volatility with the S&P and Nasdaq off and the Russell 2000 closing below its 50-day moving average, reflecting rising market uncertainty and weaker breadth.
- A key legal battle over tariffs (SCOTUS) is viewed as roughly 50-50 by the guest versus market odds; an upheld-tariff outcome raises near-term uncertainty and rebate costs, while a loss for tariffs could lead to more predictable, structured 301/232 processes medium-term.
- Fed outlook: a December rate cut is seen as roughly 65% probable, but the guest expects only one cut then a pause into early 2026, implying a less generous path of easing than some investors expect.
- Economic divergence: services are accelerating and holding up (supporting consumer-facing sectors), while manufacturing, freight, and goods activity are weakening — partly due to tariffs raising intermediate input costs and producing a K-shaped recovery.
- Market structure and thematic risk: AI and chip-related names have run valuations significantly, creating tension with seasonal strength (e.g., November into year-end) and raising the prospect of profit-taking and drawdowns.
Bullish
- If tariffs are overturned, a shift to structured 301/232 processes could create medium-term trade-policy stability.
- Services sector resilience supports overall economic activity despite goods/manufacturing weakness.
- The Fed likely still delivers one cut (65% probability), which could provide some market support.
Bearish
- Tariff uncertainty could boost near-term volatility, raise deficit worries, and push bond yields higher.
- Rich valuations in AI and chip names may need to digest, risking a larger drawdown.
- Manufacturing and goods weakness from tariff-driven higher input costs could drag growth.
- Russell 2000 closing below its 50-day moving average signals rising market volatility and breadth weakness.
Bearish tickers
MCDBTC
MCD
Bullish
Services resilience could help stabilize revenues over time, though the transcript offered no explicit bullish catalyst.
Bearish
Cited among corporates whose commentary reflects short-term weakness in consumer-facing businesses and discretionary segments.
EVR
Bullish
Evercore research suggests a higher probability that tariffs could be overturned, potentially leading to more structured trade policy and medium-term stability.
Bearish
Evercore notes higher-than-consensus tariff risk which could increase near-term market and economic uncertainty.
BTC
Bullish
Referenced as an active market component but no specific bullish thesis was provided in the discussion.
Bearish
Mentioned as part of recent volatile action; vulnerable to broader risk-off moves and valuation re-pricing.
People mentioned
Krishna GuhaSarah BianchiEamonDonald TrumpBowmanChristian