RealMoney

The test begins anew.

Last week the market rallied into the placing of tariffs on China. IT went up 3% as we thought the worst was over.

Shouldn't we give back that 3% now?

That's certainly what is on the agenda.

It would seem to be a realistic assumption given the wide range of the tariffs proposed and much bigger target --- $200 billion of goods versus the $34 billion that went into place on Friday.

That, plus a decline in the price of oil -- something that this market bizarrely views as negative despite all of the stories saying how bad it is for the economy -- are rippling through and do threaten the gains from the industrials and the oils that we got since this week began.

I think what people need to realize is that tariff news doesn't rattle the markets. It creates a rotation out of industrials and techs and into utilities, real estate investment trusts, health cares -e.g., big pharma, exacerbated today by the post-presidential tweet Pfizer (PFE) rollback -- and anything domestic.

In other words, the money does not leave the casino, or, perhaps more accurately, it comes off of one table and goes to another.

The interim, the moment when it switches, lots of sideliners bet that this time the money will depart. But it doesn't. It's the interim, where we are right now, that causes the most fear.

When do we say, "You know what, these tariffs are going to really disrupt capital spending" and at the same time we say "and we have a Fed that is oblivious to these pressures."

First, I would say this Fed is totally on the case. Each time the president ratchets things up, Fed Chief Jay Powell refines his concerns and amplifies them.

But second, business is still so good here and abroad that it is tough to throttle back most spending.

And, finally, remember, on Friday morning -- not that long ago! -- we got a fantastic employment number. Think of that in the depths of the gloom.

It still matters.