Wall Street’s 60/40 formula was born in 1952 — the same year as the first credit card. A lot has changed since.
That’s why we created a new approach — The H.E.A.T. Formula — to empower investors to spot opportunities, think independently, make smarter (often contrarian) moves, and build real wealth.
Table of Contents
🔥 Here’s What’s Happening Now
Today we talk tariffs. We are starting to see signs of the impact:
GM paid over $1bn in tariffs in Q2
Stellantis paid $350M
RTX and Hasbro talked about tariff related profit erosion
NKE expects a $1bn profit hit this year
WMT, HD, TGT, and others are signaling price hikes coming
Neither consumers nor foreign countries are assuming much of the tariff burden. At least not yet.
We know what Trump wants out of Powell, and the current thinking is 2 more cuts this year. However, if we start to see higher prices all bets are off. If we see higher prices and lower growth, that’s a problem.
MSFT, META, and AMZN report earnings next week.
Keep an eye on Bitcoin today, it’s finally selling off a bit….
Bitcoin losing the 8 ema for the first time in almost a month tonight
— #jbulltard (#@jbulltard1)
2:23 AM • Jul 25, 2025
📦 Tariffs, Tailwinds, and Traps: Our July Long/Short Playbook
We are now navigating an economy shaped by tariffs, inflation volatility, policy jawboning, and labor bifurcation. The actionable plays lie in anticipating dislocations before consensus catches up. Today we flag early signals across inflation passthrough, logistics bottlenecks, white-collar job softening, and tariff arbitrage—all of which can be monetized through long/short trades, macro overlays, and sector rotation strategies.
📈 Actionable Insights & Investment Implications
1. Tariff-Driven Inflation Repricing
China-related tariffs jump from 30% to 145% on August 12, targeting goods like toys, furniture, apparel, tools, and household items.
Inflation upside surprise is highly likely in Q3 CPI readings, especially in core goods.
Long: commodity inflation plays (e.g., shipping firms, cocoa processors, OTC inflation swaps).
Short: retail apparel brands dependent on Chinese/Vietnamese sourcing (esp. low-margin).
👉 Set up long-volatility or upside CPI call structures via CPI caps/floors or TIPS breakevens.
2. USMCA Arbitrage – The Cocoa & Coffee Trade
Finished goods (like chocolate from Mexico/Canada) now face 0% tariffs, while raw cocoa bean imports face 10%+ tariffs.
Trade idea: Long firms with North American production bases that re-export to the U.S. (e.g., Nestlé Canada).
Short: U.S.-based chocolate manufacturers reliant on non-USMCA cocoa.
📌 Embedded trade theme: Encourage analysts to screen for tariff arbitrage players in food processing, especially under HS Code 1806 (page 11).
3. White-Collar Job Market Softening
Unemployment among $75K+ earners hits an 18-month high at 2.9%.
Hiring freezes + reduced consumer spending by top decile = impending earnings weakness in discretionary/luxury names.
Short: High-end consumer discretionary (e.g., RH, LVMH US ADRs).
Long: Value-oriented quick-service restaurants (QSRs) where low-income value perception is improving (page 25).
🧠 Idea for macro overlay: Long restaurant traffic vs. short premium luxury as a barbell around consumer bifurcation.
4. Labor Market Cross-Currents – Hidden Slack
Job openings ticking up but continuing claims and duration of unemployment also rising (page 26–27).
Strong indicator of underlying slack not yet priced into soft-landing narratives.
Short: cyclical staffing companies or job boards.
Long: defensive employment hedges, i.e., private prison operators, gig economy, or healthcare HR/automation firms.
5. Quick Service Restaurants (QSR) Value Perception Surge
Fast casual has lost pricing power; QSR has bottomed and is showing value perception recovery among low-income consumers (page 25).
Long: McDonald’s, Wendy’s, YUM Brands.
Short: Chipotle or Sweetgreen if premium consumer pullback accelerates.
6. Logistics Signal – Trucking Rebound is Policy-Driven, Not Demand-Driven
July trucking volumes up, but Cowen warns it’s not driven by organic demand—factories stayed open longer than usual (page 2, 20).
Trade idea: Sell the rip in transport names unless sustained volume strength persists into August.
Watch for policy-induced distortions—e.g., EO on English proficiency might remove 3.5% of capacity (page 21).
7. Tariff Winners & Losers by Sector
Likely Winners:
Domestic manufacturers of tools, appliances, furniture.
Non-China-based textile importers.
North American food processors.
Likely Losers:
Retailers sourcing from Southeast Asia, notably Vietnam and Indonesia (e.g., shoe/apparel importers).
Industrials sourcing raw copper, drones, or polysilicon from China (due to new Section 232 probes).
➡️ Trade basket construction: Use structured pairs trades (long North American supply chain / short import-reliant brands).
8. Policy Catalysts to Front-Run
Date | Event | Trade Setup |
|---|---|---|
July 31 | Appellate court ruling on IEEPA tariffs | Long tariff beneficiaries if White House loses |
August 1 | Deadline for reciprocal tariff pause | Long US-based firms with domestic sourcing |
August 12 | China tariffs rise from 30% to 145% | Short Chinese-exposed consumer goods |
Oct 14 | Section 301 vessel tariffs begin | Long domestic shipping/logistics vs. marine |
🔮 Strategic Outlook
Dislocations across inflation, policy timing, and labor bifurcation create asymmetric trade setups.
Tariff arbitrage will create alpha in commodity-input-based names and retail sourcing chains.
White-collar softness may trigger a stealth earnings downgrade cycle not priced in by the street.
Consumer spending bifurcation favors a barbell: QSRs and dollar stores long, luxury and high-beta apparel short.
Here is a long/short equity basket structured around the 8 major themes identified.
🧺 Long/Short Equity Basket – July 2025
Theme | Longs | Shorts | Rationale |
|---|---|---|---|
1. Tariff Inflation Repricing | XPO, CPRI, CROX | BBWI, GOOS, RL | Long U.S.-based producers with reshored or NA-friendly sourcing. Short apparel/cosmetics reliant on Southeast Asia & China (30%→145% tariff) |
2. USMCA Tariff Arbitrage | HSY, CAG, KHC | LNTH, PRGO | Long packaged food producers benefiting from duty-free finished goods from CA/MX. Short firms exposed to raw commodity inputs or non-USMCA supply chains |
3. Consumer Bifurcation (High-Income Weakness) | WEN, MCD, DPZ | RH, TIF (LVMUY), LULU | Long QSRs gaining traction among low-income cohorts. Short high-end retail exposed to upper income softness (page 29) |
4. Labor Softness / Job Market Weakness | HELE, RHI, ADP (defensive HR) | UPWK, ZIP, TTEC | Long HR/payroll infra benefiting from churn. Short gig platforms or cyclical hiring services |
5. Transport False Rebound (Policy Driven) | — | JBHT, KNX, ODFL | Cowen sees trucking July bump as non-fundamental. Short into the fade, esp. those exposed to immigrant labor vulnerability from EO (page 21) |
6. Coffee/Cocoa Tariff Trades | NSRGY, SJM, KDP | MNST, JVA | Long firms with CA/MX chocolate sourcing (page 11–12). Short raw importers of coffee/cocoa (Brazil: 50% tariff imminent) |
7. Inflation Pass-Through | POOL, LOW, HD | HAS, MAT, CRCT | Long U.S. durables with less exposure to toys/home goods from China. Short Chinese-import-exposed categories (e.g. toys ~70% sourced from CN, see page 13) |
8. Section 232 Supply Chain Rotation | AA, FCX, ATI | TSLA, NIO, BID | Long North American metals and strategic material producers. Short import-exposed industrial/EV names tied to copper, aluminum, or semis |
📈 Stock Corner
Today’s stock is GSR Acquisition Corp (GSRT)….
GSR is a pre merger SPAC that has filed a business combination with Terra Innovatum, a small modular nuclear reactor developer. Unlike other companies in the space like OKLO and SMR (see below for more on SMR), it has the NAV floor of a pre merger SPAC.
Today options get listed on it, which is probably why you saw it up over 2% yesterday. This changes the structure a bit, and anything can happen, but as long as you have the SPAC floor I love the asymmetry.
Full disclosure, this is now the largest holding in SPCX.
📬 In Case You Missed It
Launching Today!!!!
2 new T-REX ETFs are coming tomorrow! 🎉
$CRWU, The T-REX 2X Long $CRWV Daily Target ETF
$SMUP, The T-REX 2X Long $SMR Daily Target ETFAmplify your trading with T-REX!
Fund Prospectuses:
sec.gov/ix?doc=/Archiv…— #REX Shares (#@REXShares)
6:18 PM • Jul 24, 2025
🤝 Before You Go Some Ways I Can Help
ETFs: The Antidote to Wall Street
Inside HEAT: Our Monthly Live Call on What Wall Street Doesn’t Want You To Know
Financial HEAT Podcast https://www.youtube.com/@TuttleCap Freedom from the Wall Street Hypocrisy
Tuttle Wealth Management: Your Wealth Unshackled
Advanced HEAT Insights: Matt’s Inner Circle, Your Financial Edge
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