From the desks of Stanley Katz & Lauren Madera
WELCOME TO MARCH MADNESS! PUN INTENDED.
The three major U.S. stock market indices moved cautiously higher this week (i.e., DJIA: +1.20%, S&P 500: +0.51%, Nasdaq: +0.17%). This modest advance came amid escalating recession concerns highlighted in Schwab’s recent report. Economic sentiment indicators and surveys (aka soft data) have deteriorated, raising concerns that actual economic output, employment, and spending figures (aka hard data) may soon follow suit. We have seen a rapid rise in job-cut announcements and news stories mentioning the word “stagflation.” In addition, there has been a notable shift in the correlation between bond yields and stocks. The now-positive correlation (i.e., lower bond yields + lower stock market) implies that growth concerns may consume more investor mindspace than easing inflation.
The Federal Reserve maintained its wait-and-see approach at its March meeting this past week, keeping rates steady for now. Tariffs, federal layoffs, and immigration changes have created a challenging environment for monetary policy decisions. Fed Chair Powell has not wavered in his message that the central bank won’t rush to adjust rates without greater clarity on inflation and growth trajectories. According to futures markets, the probability of a rate cut this year has risen to 66%. Investors are now pricing in two to three 0.25% cuts in 2025 – more than the two projected by the Fed itself. Financial markets have been recalibrating against this ambiguous backdrop.
Below are links to a number of third-party research reports that we have read and analyzed over the past week. We hope you will find the information interesting, useful, and worthwhile.
Schwab:
Capital Group:
Franklin Templeton:
American Century:
Argus:
Stanley Katz & Lauren Madera, Financial Advisors
ClientFirst Financial Strategies, Inc.
937-293-5500
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