Cry
Preview for 2025: Tariff's uncertainty The market response to President Trump's 'Relief Day' tariff announcements on April 2, 2025, has been serious. Entering a relief day, the S&P 500 was already down 8% of the highlights always set in mid -February. Indeed, the first three months of the year balanced a wave of enthusiasm about potential deregulation and lower taxes with a growing concern about trade policy that is still being delivered. Details of the release day stunned investors and sent the market to a full -scale panic. From the end of 5,671 on April 2, the S&P stole 500 to 4,983 by April 8 – a decline of 12%. Investors feared that the tariffs as proposed together with vengeful tariffs by trade partners could introduce the US economy and perhaps the world -wide economy. As stocks tanked, the Safe Home trade did not come to expect at the US Treasury Market. Instead, the Treasury product raised, and the dollar-signs weakened that global investors were leaving US asset classes that were previously considered a Graig-solet. The market has bounced back since then and, from mid-April, the S&P 500 was trading near 5,425-up about 8% from April 8 low but still 12% lower than its highest ever. The administration seeks to make deals that reduce tariffs with a host of nations. Different nations and product categories have had exceptions, typically for a few months. This has created a position of flux where the exact impact of all tariffs is almost impossible. A single size blanket tariff would enable companies to assess projected effects and take forward business planning. The unstable and changing state of the tariff agenda causes businesses and consumers to delay expenditure while waiting for clarity. The first quarter began with optimism but ended with the predecessors of investors, which has not disappeared in the second quarter. Tariffs have taken a toll on markets, and have ruined consumer feeling. Tariffs are not the only factor in the economy, however. Leaving the first quarter, the US economy still appears to be on a solid foundation, given a healthy employment situation and prospects for this year's EPS growth. The economy will need this foundation as the country and the world adapt to the developing trade war. Perspective on the coming year in 2023, the stock market rallyed over 20% on signs that inflation was decreasing, the Fed would wrap its rating hiking campaign, and the supply chain would normalize. In 2024, stocks rally more than 20% again as economic growth strengthened, accelerated the growth of earnings, and job growth remained heartbreaking. The year 2025 began with uncertainty but also optimism that the new administration would be more business -friendly and would move quickly to lower taxes. Investors have turned pessimistic mainly on tariff policy, but also concerns about the effects of potential ripples across the heartland from Doge job cuts and re-ordering international relations with friends and enemies alike. In a large end of 2024, inflation remains stopped in the 'last mile' between 3% and 2%. For the past three years, investors have been familiar with monetary policy as the FED seeks to reduce inflation. The focus of investors in 2025 has been moving into fiscal policy given the administration's promise to cut taxes further. Geopolitical 2023-the War Geopolitical event between Israel and Hamas-I continued into 2024. President Trump discovers that bringing the war in Ukraine to an end is not easy. Europe has confirmed its decision to defend Ukraine following more hosting treatment Mr Trump of Russian Vladimir Putin and US statements about Greenland, Canada, and the Panama Canal. Economic activity in China, the world's second-largest economy, has warmed up from post-covid lows, but remains mixed. The government's ambitious financial stimulating program to drive economic recovery has been broken by demographic factors. Triple digit tariffs charged by the United States and by China are effectively threatening to end all trade between the world's two largest economies. Both sides may be able to discuss downward tariff rates from these impossible levels, but any final tariffs are likely to remain too high. The global macro-environment had appeared fairly positive to US stocks. Bilateral relief and response day tariffs to US tariffs from trading partners threaten to release a difficult and lengthy trade war. Although some of the challenges facing US stocks in 2025 reflect new policies coming out of Washington, we are currently not expecting policy shifts to turn the economy into the recession. Measures of the commercial and industrial economy – including PMIS manufacturing, durable goods orders, and industrial production – have moderated but remain consistent with persistent growth, if quiet. Sensitions like Small Business Confidence indicators on Donald Trump's election but since then they have turned lower. Feeling is an unreliable predictor of future activity and can move quickly. Digitment and high funding rates continued to weigh consumer confidence in 2024. High and long tariffs are in danger of pushing inflation higher, causing consumers already strapped to withdraw from large ticket purchases. Tariffs threaten a multi-year increase in curbing inflation but could have a quiet impact on general price trends depending on future negotiations and also on companies' willingness to absorb rather than passing higher costs. We expect the US economy to continue to expand in 2025, remaining on a narrow growth path in line with the growth of a humble population and higher productivity. Following the growth of GDP from year -on -year in 2023 and 2.8% GDP growth for 2024 (both revised), Argus from mid -April 20205 is modeling 2025 GDP growth of 1.3%. That target was recently reduced by 2.0%. The Fed reduced inflationary growth, although reaching a 2% target of the Fed has proven to be challenging. The federal funds rate was 4.25% -4.5% in April 2025, unchanged from the end of the year 2024, while the PCE core inflation index is up 2.8% annually. Based on the revised 'plot' of the FED from March 2025, we continue to expect two rate cuts in 2025, loaded back to the second half. Argus currently expects a short -term product to move gradually from current and long product levels to expand their relative premium to short products. In early April, Fed Chairman Jerome Powell warned that President Trump's sweeping tariffs could pervert inflationary progress and motivate 'stagnation.' Those concerns could keep the Fed on the sideline in 2025. At the sector level, key drivers for 2025 earnings are likely to include strong growth in healthcare gains and improved performance by sectors (energy, materials and industries) which dragged on 2024 earnings. Energy prices have been interchangeable in recent years. We are looking for a better balance in the supply-supply equation to keep P energy.