Fed Gov. Waller: Supreme Court ruling on tariffs may have positive impact on spending, investment

Fed Governor Waller stated that the Supreme Court ruling on tariffs "may have a positive impact on spending and investment." If the legal ruling reduces tariff burdens or uncertainty, it removes a headwind for business capex (Industrials) and consumer costs (Discretionary). This creates a favorable environment for sectors reliant on investment and consumption. Long sectors tied to "spending and investment" (Consumer Discretionary and Industrials). Waller noted "considerable uncertainty" regarding how businesses will actually react and to what extent tariffs continue despite the ruling.

The government shutdown detracted approximately 1.15% from previous GDP, but forecasters are "putting it back into this quarter," with Goldman Sachs predicting 3% growth. The economic drag was temporary and artificial. The reversal of this drag creates a mechanical lift in GDP data for the current quarter, supporting the narrative of a resilient economy. Long broad US equities to capture the growth rebound. If the underlying economy (excluding government effects) slows faster than the rebound adds growth.

Waller is "on the fence" regarding March policy. He explicitly stated a "strong February jobs report would support the pause," while "it could be appropriate to cut if February jobs are weak." The Fed views January data as potentially "noise" driven by tariffs. The February jobs report is now the binary trigger: Strong data = Higher for longer (Bearish Bonds); Weak data = Rate Cut (Bullish Bonds). Watch the February labor data; the Fed is strictly data-dependent here. January data might have been signal, not noise, leading to policy missteps.