Yesterday’s huge rally speaks to traders’ faith that the Fed can cure all economic ills. Problem is, it can’t. But my how it can spark a rally with the merest hint of a rate cut; particularly when the economy is slowing, but not yet in recession mode; which is my current assessment.

This morning’s hugely disappointing U.S. private payrolls report (+27k vs +175k expected!), along with this week’s read on global PMIs (slowing!) and the IMF’s global outlook (slowing!) hasn’t deterred what looks to be a nice follow through to yesterday’s rally (Dow future up 140 as I type); in fact, given the present bad-news-is-good-news (means Fed rate cuts coming) mentality, this morning’s weak data fuels it.

The potential immediate market mover is the Mexican tariff situation. The Republican Congress opposes them big time (they’re right!) and are pleading with Trump to change his mind, while Schumer and company are strategically egging him on by pointing out that they are a profoundly bad idea and virtually guaranteeing (publicly!) that he’ll backtrack. Yes, the economy (not to mention the stock market) will not welcome more tariffs, thus daring him to go there (playing him by calling him a bluffer), and succeeding, potentially does him real political damage. At the moment, alas, per a tweet yesterday, he’s taking the bait.

The market at the moment finds itself teetering on the edge of a big move in either direction. If Trump finds a face-saving way to back off of the Mexican tariffs, we’ll see a substantial rally (if it wasn’t already priced in yesterday, that is), if he doesn’t, we’ll see stocks tank. More Fed speakers this week will either confirm or conflict with the week’s dovish tone established by those who presented Monday and Tuesday. Confirmation would be short-term bullish, conflicting with not so much…