Weekend Update #222
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U.S. stocks rebounded late on Friday, helping the S&P 500 break a four-week losing streak. Market sentiment was weighed down by FedEx and Nike, both of which cut their earnings outlooks, citing economic uncertainty tied to tariffs and weakening consumer confidence. The session was marked by volatility, with major indexes recovering from earlier lows after President Donald Trump signaled potential “flexibility” on tariffs. However, he reaffirmed that tariffs set for the April 2 deadline would be reciprocal, targeting countries that impose tariffs on U.S. goods.
In economic news, U.S. retail sales rose less than expected in February, and January’s figures were revised lower. However, control-group sales — a key input for calculating goods spending in GDP — climbed 1% in February, offsetting the prior month’s decline.
The Federal Reserve held its benchmark interest rate steady for a second straight meeting, as officials weighed signs of a slowing economy against the risk of stubbornly high inflation. Chair Jerome Powell cited heightened uncertainty from President Donald Trump’s recent policy shifts but reiterated that the Fed is in no rush to change borrowing costs, preferring to wait for clearer insight into their economic impact. The Federal Open Market Committee kept the federal funds rate at 4.25% to 4.5% and signaled a further slowdown in its balance sheet reduction. Updated projections showed a downgrade in growth expectations and a higher inflation outlook, while the median forecast still pointed to two quarter-point rate cuts by year-end.
Other market highlights:
Apple Inc. is undergoing a rare shake-up of its executive ranks, aiming to get its artificial intelligence efforts back on track after months of delays and stumbles, according to people familiar with the situation.
Nvidia Corp. aims to spend billions of dollars to procure US-made chips and electronics over the next four years, the Financial Times reported.
Kraken is acquiring retail futures trading platform NinjaTrader for $1.5 billion.
Coinbase Global Inc. is in advanced discussions to acquire crypto derivatives exchange Deribit, Bloomberg reported.
Ticket selling platform StubHub Holdings Inc. filed for an initial public offering, seeking to raise over $1 billion.
Friday’s Close (Weekly Performance)
S&P 500 5,667.56 (+0.51%)
Nasdaq 17,784.05 (+0.17%)
Dow Jones 41,985.35 (+1.20%)
Thank you Blue Room Senior Analyst NICK PEART.
Federal Open Market Committee Press Conference
Wednesday, March 19, 2025
12:30 PM MDT
Market Commentary
We are collectively assessing in real time the impact of the Trump Administration’s strong push to enact its trade policy. We don’t know how much lasting damage has been done to the economy, but the consistent pace of tariff headlines have coincided with a significant deterioration in consumer confidence with a growing anticipation of a resurgence in inflation. I would guess that the market has priced in a 50% chance of recession.
President Trump’s Strategy
I want to be bullish on the Trump Administration, because his trade policies seek to redress economic realities that I experienced growing up in Dayton, Ohio. When NAFTA was enacted in 1993, I remember how the community had guarded optimism for the new free trade regime. Ultimately, NAFTA resulted in the loss of jobs and multi-generational stagnation. Restoring America’s manufacturing industry will produce lasting dividends. Firstly, our national security will benefit from having more knowledge and capability nearby and onshore. Additionally, manufacturing jobs provide opportunities for millions of Americans who like to work with their hands. Tariffs resulting in manufacturing coming back to the United States could result in the expansion of the labor force participation with a simultaneous reduction in societal costs of people disenfranchised from the economy.
If geopolitics can now be distilled into a poker game, President Trump entered tariff negotiations from a position of strength. The U.S. economy is the strongest in the world. The world’s reliance on our unparalleled military capabilities is glaringly evident. The United States vast energy resources could be unlocked to supply the world, further strengthening the position of the dollar as reserve currency.
Although the labor market is softening, overall unemployment is historically low.
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