It is true that tariffs are a tax. It is also true that tariff policies have been volatile…on and off again…different carve outs…different countries…phone calls that change things. All this clearly has an impact on the market. So, we are not surprised to see stock market volatility. However, it isn’t all about tariffs. Many major models of overall stock market valuation show that the market is expensive. The so-called Buffet Indicator, which measures the market cap of the S&P 500 … View More
Is the US already in recession? Probably not. But in the first quarter, real GDP is very likely to have a minus sign in front of it. Yes, a negative reading for real growth! Even before Friday there were some troubling signs. Retail sales fell 0.9% in January while housing starts dropped 9.8%. The personal saving rate hit a new post-COVID low in the fourth quarter, existing home sales declined 4.9% for the month and, with pending home sales (contracts on existing homes) down, February will like… View More
Global financial markets have hit a rough patch as the cumulative impact of President Trump’s trade and related economic threats are fueling concerns that he will diverge from the pro-growth script that he initially followed during his first term. Then, the positive economic elements arrived first, primarily tax cuts, before the negative actions followed, i.e., a brief trade war. These negative actions caused a downturn in global trade and slowed the U.S. economy and corporate profits. The U.… View More
We don’t want to over-emphasize the importance of one data point, but the data over the last several months suggest that the progress toward the Fed’s much-vaunted goal of 2% inflation has slowed. In truth, the 2% target is a widely agreed-upon fiction among both policymakers and market participants themselves borne out of a New Zealand central bank paper from the late 1980s. Ironically, the target was only invoked when inflation was serially below 2% in the aftermath of the GFC. Since the … View More
There is nothing easy about forecasting financial markets, and when combined with a President who changes his mind in a matter of moments on policies that may a have lasting impact on sectors, industries, or specific companies, it becomes that much more challenging. Three weeks into Trump 2.0 we felt it was as good a time as any to review our sector recommendations. We feel being overweight the Financials, Industrials, Utilities and Energy sectors remains a prudent strategy. The deregulation st… View More