The markets don’t like it. With chaos and uncertainty triggering meaningful losses on Wall Street for a second consecutive week. That saw the S&P 500 lose 59 points or .98%, the NASDAQ plunged 677 points or 3.47%, while the DOW gained 413 points or .95%.
Despite the chaos and uncertainty of the Trump administration, DOGE and Elon Musk. The results to date have struck a chord with the American public. With polls showing that they are happy with the results in the majority. Despite what might be some short-term pain.
It’s The Economy Stupid
So far, the data continues to come in positive despite mounting evidence of Federal employment reductions. While notable they are unlikely to make a significant statistical impact based on the available data to date. January Personal Income jumped .9% or triple expectations. Even though chaos and uncertainty plagued consumer spending. It missed expectations with a .2% decline. Vehicle sales estimates for February remain robust at 16.1 million units. This represents the largest component of retail sales, which make up about 70% of total economic activity. Thanks to CalculatedRisk for the chart.
Interest Rates
Are struggling again as the yield curve has re-inverted. With no shortage of pundits blaming political uncertainty, deficits, inflation, and more. It is worth noting that primary dealers are holding a record high level of unsold Treasury paper. Risking structurally higher yields and funding flare ups. This leads to increased pressure on DOGE to deliver meaningful budget savings and reduce the deficit. Let’s hope Elon Musk and his team deliver the goods. Thanks to Bloomberg and Macrobond for the chart.
On The Subject Of Chaos And Uncertainty
I’ll close with the following observations. Supply chains are global and extremely complicated. This leaves them susceptible to the effects of tariffs. The US is particularly vulnerable as capital stocks, aka domestic manufacturing and production, have been depleted following decades of offshoring. A deficit that will take time to correct.
Covid Déjà Vu? Just when you thought it was safe to mingle. This week marked the beginning of the global financial market panic in response to the Covid 19 fiasco. To kick off the celebrations, the Wuhan Lab in China, yes that “Wuhan Lab”. Proudly announced to begin the week. That they had “discovered” a new Coronavirus in Bats with the potential to spark another pandemic.
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Last Week’s Post: The Rapid Pace Of Change
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