Investing.com -- Dan Niles, founder of Niles Investment Management, maintains a bullish market outlook despite recent tariff threats against multiple nations.

Niles noted that the S&P index remains slightly up and near 52-week highs even after weekend tariff threats, contrasting with market reactions to similar rhetoric earlier this year.

"I pay attention to the reaction to the data more so than the actual data for my near-term views while the actual data shapes my longer-term views," Niles said.

The investment manager cited two factors supporting potential market upside: approximately $7.1 trillion in money market funds (up 15% year-over-year) providing buying power, and expectations of Federal Reserve rate cuts supporting high market multiples.

Niles expects solid second-quarter earnings results, supported by conservative company guidance during Q1 earnings, a 7% drop in the US dollar from Q1 to Q2 benefiting international revenues, and demand being pulled forward ahead of tariff-related price increases.

Despite his near-term optimism, Niles maintains a cautious longer-term outlook, suggesting a potential 10-20% market drop approaching Thanksgiving. He attributes this risk to current demand pull-forward (with imports up 38% year-over-year in Q1) potentially hurting holiday demand, combined with high price-to-earnings ratios at 24 times calendar year 2025 earnings.

"I remain bullish near-term but am prepared to react as the market reaction to data changes," Niles stated, adding, "Right now the glass is half full."

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