With incoming president Trump’s inauguration drawing closer the rhetoric surrounding the use of trade tariffs is heating up. A lot of discussion has focused on their inflationary impact. With some pundits predicting a nearly 1% increase in inflation next year. As with most things in this world the devil is in the details. With the cost cutting and deregulation planned by the Doge Brothers and company. The feared inflationary effects from tariffs, tighter immigration controls and deficit reduction should get canceled out. Will just have to wait and see.
The major averages finished the week mixed despite positive economic and earnings news. Syria’s collapse to start the week spooked the markets. Leaving them struggling into Friday’s close to regain their footing. Since Monday the S&P 500 Index lost 49 points or .8%, The NASDAQ gained 67 points or .34%, while the DOW shed 817 points or 1.83%.
Inflation Next Year
If the Trump administrations trade and foreign policies drive inflation higher in 2025. The interest rate picture will get a lot more complicated. While the markets have dialed back their excessive enthusiasm for rate cuts next year. A ¼% cut next week is all but assured. After that it becomes anyone’s guess. As inflation will be the primary driving force. Thanks to Reuters and LSEG for the chart.
Economic Boom?
The latest estimates for 4th quarter GDP from the Atlanta Fed GDPNow model indicates robust 3.3% growth to close out the year. An upward revision to this estimate followed data from the US Census Bureau, the Institute for Supply Management, and the US Bureau of Economic Analysis.
Another group with sharply rising sentiments in the post Trump election victory period. Is small business owners, the backbone of American economic and job growth. The latest data from the National Federation of Independent Business. Shows the largest monthly gain in its optimism index since 1980. Thanks to the National Federation of Independent Business and Bloomberg for the chart.
That’s all for this week folks, I’ll see you again next Friday.
Best, Caleb
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