March 7th, 2025
Hold on tight.
The current economic landscape has a lot of folks concerned. Reasonably so. This all feels like a high stakes game of chess – or maybe it’s just checkers? – with global markets bracing against the implications of Trump tariffs. The ongoing tit-for-tat escalation has transformed into a risky game of chicken, leaving investors on edge about the potential impact on international trade dynamics and corporate profitability.
This morning, we had a good jobs report. Yesterday, we saw most tariffs suspended. The economy is still looking quite healthy – and yet, markets are looking a bit rough this morning.
Meanwhile, Ukrainian President Zelensky’s expressed eagerness to return to the negotiation table and end the prolonged conflict brings a glimmer of hope for geopolitical stability. However, the lingering uncertainty continues to cast a shadow over market sentiment, particularly in Europe and surrounding regions.
In the United States, the Atlanta Fed’s recent stark revision in its GDP Now forecast for Q1 2025, where they expect to see a 2-3% contraction, has sent shockwaves through financial circles. The substantial downward adjustment underscores growing concerns about the domestic economic outlook, despite recent positive developments such as lower interest rates. The Federal Reserve’s ample dry powder suggests potential rate cuts on the horizon, seen as a buffer against economic headwinds worsened by geopolitical tensions.
The February jobs report was only slightly below expectations, helping to ease some concerns that the labor market could be weakening, a major driving force for market health. The full impact of the recent government job cuts will likely show up in the March data, so the unemployment rate is still a variable, and will need to be monitored.
Should we sell?
A question I’ve received from a few clients this week.
Generally, I would not suggest selling. Technically, we’re still in an uptrend – I know, hard to believe. But we’re just at the bottom of that uptrend range. Fundamentally, we’re enduring some major uncertainty in future forecasts, yet the current numbers are still strong.
In the technology sector, recent corrections have rendered certain stocks notably cheaper, prompting discussions about favorable entry points for those willing to accept the volatility as temporary – buying at current market lows. The broader market has experienced a rolling correction, characterized by sector rotation rather than wholesale stock exodus, raising questions about the sustainability of current valuations.
Again, I do not like the idea of selling just yet. I’d hate to lock in lower values and have the market come back up after the dust settles. That said, I have a line in the sand. And when that line in the sand is crossed, I typically work to exit some, or part, of our positions and raise cash – but never all of our positions. This ensures cash on hand to buy at lower prices, but ensures that we don’t completely lock in lower prices and have the market bounce back without our participation. Attempting to time such a thing perfectly is just not possible, but we do have a strategy for times like these.
Please feel free to reach out to me with your questions/concerns or respond to this email to schedule a call with me.
Thank you so much for your ongoing trust and support. We are grateful to serve you in the ups, and the downs.
Warmly,
Mark S Sauer
