Stocks Gain as Court Blocks Tariffs; Yields Climb | The Close 2/20/2026
Speakers
Summary
- Supreme Court Blocks Tariffs: The U.S. Supreme Court ruled President Trump exceeded authority under IEEPA regarding "Liberation Day" tariffs. The effective tariff rate drops from 13.6% to 6.5%, though Trump threatens new 10% global tariffs via other statutes (Section 122/301).
- Market Reaction: Equities rallied (S&P 500 +0.5%, Nasdaq +0.9%), led by Big Tech. Bond yields climbed slightly (10Y +1-2 bps).
- Refund Potential: Up to $170 billion in collected tariffs could potentially be refunded to importers, though the process will be litigious and lengthy.
- Regime Shift Thesis: Franklin Templeton argues the market is shifting from "AI Domination" to "Broadening," favoring Energy, Cyclicals, and Value over Mega Cap Tech.
- AI Disruption Realized: Akamai (AKAM) fell ~14% despite a beat, driven by fears that AI renders legacy software/infrastructure obsolete.
- Private Credit Cracks: Blue Owl (OWL) restricted withdrawals from a retail fund, sparking liquidity concerns in the asset class.
Trade Ideas
The Supreme Court blocked the IEEPA tariffs, cutting the effective rate significantly. While Trump threatens new tariffs, the immediate cost burden on importers has dropped. Retailers and importers have already priced in the "worst-case" tariff scenario. A reduction in the effective rate creates immediate margin relief. Additionally, the potential (though uncertain) refund of historical tariffs represents a massive cash windfall option for these balance sheets. LONG Importers/Retailers as margins expand due to lower realized tariff costs. Trump successfully implements new, higher tariffs via Section 122 or 301 before margin benefits materialize.
Comfort Systems (FIX) and General Electric (GE) hit all-time highs today. FIX is up ~60% YTD. These companies represent the "physical economy" and industrial renaissance (HVAC, power generation). They are immune to the "AI software displacement" fears and benefit directly from data center build-outs (cooling/power) and re-industrialization. LONG Industrials/Services exposed to physical infrastructure build-out. Valuation concerns after massive run-ups; sensitivity to high interest rates slowing construction.
Blue Owl restricted withdrawals from one of its retail private credit funds. The stock is down ~10% on the week. Gating withdrawals is a classic signal of liquidity mismatch in private markets. It suggests that retail demand for private credit is cracking or that underlying asset liquidity is worse than advertised. This sentiment contagion can drag down the entire sector. AVOID Private Credit Managers due to liquidity/sentiment risk. If Blue Owl successfully resolves the liquidity crunch quickly, the stock could rebound on relief.
Berkeley Belknap
Head of U.S. Portfolio Management, Franklin Templeton Investment Solutions
Franklin Templeton notes a "regime shift" where earnings growth is broadening beyond the "Mag 7." The Russell 1000 Growth is down YTD while Value is up. The macro backdrop remains strong (GDP growth, spending), but valuations in Mega Tech are stretched. Capital is rotating into sectors with lower multiples that benefit from a resilient economy (Energy, Cyclicals, Small Caps). LONG Cyclicals, Energy, and Value to capture the rotation trade. A sharp economic slowdown or recession would hurt cyclicals more than quality tech.
Berkeley Belknap
Head of U.S. Portfolio Management, Franklin Templeton Investment Solutions
The long end of the Treasury curve is under pressure. Belknap expects the Fed to cut less than the market expects (2 cuts max). There is a "huge amount of Treasury issuance" competing with massive corporate bond issuance from Hyperscalers (AI capex financing). Supply overwhelms demand. Additionally, Fed nominee Kevin Warsh may reduce forward guidance, increasing volatility and term premiums. SHORT Duration / Long-End Treasuries (favoring short duration like T-Bills). A sudden recessionary shock drives a flight-to-safety rally in long bonds.
Tom Leighton
CEO, Akamai Technologies
Akamai stock dropped ~14% despite beating earnings. The market is aggressively selling software/infrastructure names on fears of AI displacement. Investors are adopting a "shoot first, ask questions later" mentality regarding AI disruption. Even if a company (like Akamai) claims AI helps them, the market views legacy SaaS and infrastructure as vulnerable to being replaced by AI-native code generation and automated agents. AVOID Legacy Software/SaaS until the "AI displacement" discount stabilizes. The market may be overreacting to the AI threat, creating a deep value opportunity if these companies prove resilient.
Up Next
This Bloomberg Markets video, published February 21, 2026, features John Kernan, Carol Massar, Romaine Bostick, Berkeley Belknap, Tom Leighton discussing GM, NVDA, AAPL, NKE, TPR, FIX, GE, OWL, XLE, IWM, VEA, TLT, AKAM, IGV. 6 trade ideas extracted by AI with direction and confidence scoring.
Speakers: John Kernan, Carol Massar, Romaine Bostick, Berkeley Belknap, Tom Leighton · Tickers: GM, NVDA, AAPL, NKE, TPR, FIX, GE, OWL, XLE, IWM, VEA, TLT, AKAM, IGV