As a 3rd consecutive losing week sends the major averages into correction territory. Since Monday the S&P 500 lost 184 points or 3.1%, the NASDAQ fell 651 points or 3.45% while the DOW gave up 1.039 points or 2.37%. A truly bruising tariff tantrum inspired performance.
Show Me The Money
Despite the recent correction level declines in response to the Trump inspired chaos. The data remains fairly solid. 4th quarter revenue per share and earnings per share both set records following a 12.8% 4th quarter profit margin. Thanks to LSEG Datastream, Yardeni Research and Standard and Poors for the chart.
Despite the strong earnings and revenue results the Magnificent 7 stocks have taken a beating lately. Down 16% from recent highs breaking their 200-day moving average for the first time in more than two years.
The Economy – What Tariff Tantrum?
Despite the equity markets carnage of late the economy remains on track seemingly unfazed. The latest Beige Book on regional economic conditions shows steadily decline usage of “recession” from 6 times to just 2. Usage of “slow” fell again to 35. The ISM Services survey beat expectations in February. The employment component hit a 3-year high and new orders jumped. Hardly Tariff Tantrum data as the economy continues to chug along.
The Q-1 2025 GDPNow series plunged to -2.8% as importers attempted to front run Trumps tariffs. While this makes for an alarming headline. Expectations are that it is a one-off knee-jerk event rather than the beginnings of something far more significant. Thanks to the Atlanta Fed and MishTalk for the chart.
If the effect of imports is backed out from the Atlanta Fed data, the -2.8% Q1 GDP figure jumps to +1.5%. The balance of the week’s economic data: Construction Spending -.2%, Manufacturing slightly positive, Factory Orders ahead of expectations and an inline Employment report round out a mixed week for economic data. With the mainstream media trying hard to convince everyone. That the Trump Administration is taking a wreaking ball to everything in sight. The data to date doesn’t support the media narrative.
What About DOGE?
Layoffs, a byproduct of all the waste, fraud and abuse uncovered by DOGE. So far has failed to produce substantial employment loss. Even though more are expected, and I might add needed. DOGE inspired employment loss is expected to remain moderate. Add it all up and include the recent oil price decline. The effects are likely to prove somewhat deflationary into the summer. Which in turn should help to push interest rates lower as the economy muddles along.
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