[DrVenture]

I'd love to find some data to make the economic and stock market outlook appear more favorable. I sold more equities on Wednesday, as the opportunity presented itself.

BoA now says that "The bull market could be disrupted by unanticipated economic slowdown". I have no specifics, but this is a big change from only 2 months ago.

Meanwhile, our stock market which has led the global markets for a very long time, falls behind this year. "...stocks in Europe and China are vastly outperforming the U.S. equity market. The S&P 500 is up a little over 1% since Jan. 20, as of the close on Thursday after the latest sell-off, while the broad-based MSCI China ETF has risen roughly 17%. The iShares Eurozone ETF is up roughly 6% in that same time span. The iShares China Large Cap ETF, meanwhile, is up about 16%.

The Dow Jones Industrial Average is barely hanging onto a positive return over the past month.

The leaders of U.S. tech are not faring better against Chinese rivals in the markets. The Invesco QQQ ETF is up about 2.5%, while the KraneShares CSI China Internet ETF has risen roughly 20%."

Apparently, home sales are dropping sharply:

https://www.cnbc.com/2025/02/21/janu...-hit-high.html

"Stocks sold off on Friday as new U.S. data sparked concern among investors over a slowing economy and sticky inflation, leading them in a search for safer assets.

Losses increased into the close as traders feared staying long into a weekend that could bring another barrage of headlines from the Trump administration, which has proposed a flurry of tariffs and other market moving policy changes since taking charge a month ago.

The Dow Jones Industrial Average lost 805 points, or 1.8%, bringing its two-day losses to more than 1,200 points. The S&P 500
traded 1.6% lower, falling for a second day after closing at a record on Wednesday. The Nasdaq Composite dropped more than 2%."

[DrVenture]

Barron's summary points from 2/17/2025:

"Inflation (CPI) was higher than expected; chaotic news is coming out of DC; cyclicals are weak; new highs have been without good follow-through or breadth. The stock market seems to be topping out and its risk-reward has turned negative. Rather than climbing a wall of worry, the market is butting head against a wall of uncertainty. A support may be at 200-dMA around 5,680."

"U.S.A. withdrew from global corporate minimum tax (15%) agreement that wasn’t yet ratified. This Agreement was opposed by US big tech and pharma with operations overseas. But the withdrawal may create complications – the digital services tax (DST) by European countries and Canada were rescinded due to this Agreement, so they may comeback. This will add to the problems created by the new tariffs. The EU is also concerned by the US social-media giants dropping content moderation – there are now the EU Digital Services Act and the AI Act. The US and EU are headed towards long fights over this, and the US big tech and pharma may be caught in the crossfire."

T-Bills 3-mo yield 4.34%, 1-yr 4.23%; T-Notes 2-yr 4.26%, 5-yr 4.33%, 10-yr 4.47%; T-Bonds 30-yr 4.69%;

TIPS/Real yields 5-yr 1.71%, 10-yr 2.04%, 30-yr 2.36%

"Pg 8, UP & DOWN WALL STREET. AI hype now may be comparable to those for Internet during the dot. com bubble of 1999/2000 or for radios in 1920s. The new technologies typically go through several up and down phases (some say that AI has already had a few). The Magnificent 7 are no longer software cash cows but are making huge capex for AI that haven’t translated into profits. Datacenters being built, some with Government incentives, will have uneven demand with demand gaps, and would lead to lumpy earnings (that’s not what is typically expected of growth highflyers).

Other worries include high US budget deficit (6.2% of GDP) and debt (near 100% of GDP). The interest costs are 3.2% of GDP, so higher than the primary deficit of 3% (ex-interest). Many countries are gradually diversifying away from the dollar. Be cautious.

The stock market ignored previous general tariffs, but liked the new reciprocal tariffs (actually, it liked the vagueness of the announcement and longer timeframe for implementation). Some carveouts are also expected for areas of national importance. Markets didn’t pay much attention to MUSK’s DOGE. Deficit reduction from 2.5% of federal workforce leaving will be a drop in the bucket, so DOGE produced more sensational news than meaningful cuts. Interest on federal debt at 3.28% of GDP (2028 est 3.9%) is the largest component of deficit and 10-yr Treasury yield may be the key to reducing that."

"Pg 27 , TECH TRADER. US CHIP TARIFFs may become a stumbling block for its AI leadership. The US now relies on imports of basic and advanced chips because there isn’t enough domestic capacity. New fabs are being built, but those will take several years to start producing. In addition, the related infrastructure developments will require participation of global investors. The US is also taking deregulation steps to address the power needs of AI datacenters. But chip tariffs will be passed on to customers and reduced demand from higher prices will make US AI investments less attractive to global investors. The US and global AI stocks may sell off. It’s also unclear whether chips will be exempted from the newly announced reciprocal tariffs."

Pg 24, INCOME. Several dividend-payors in the following sectors may be tariff-proof: Real estate (STWD, NLY-mREIT), energy (VNOM), consumers (CVS, PM), financials (PFS), utilities (AES, DTE, EVRG, NEW, WTRG).

Pg 25, FUNDS. In the race to zero fees, there are several SP500 ETFs now – SPLG (2 bps), IVV (3 bps), VOO (3 bps), SPY (9 bps). The largest and most liquid is SPY, but VOO and IVV are catching up fast.

[floridaorange]

Same article -

The drop was dramatic, but several mitigating factors show there’s no cause for alarm. Some of it can be chalked up to bad weather, and some to auto sales tanking in January after an unusual surge in December due to fat dealer incentives,” said Robert Frick, corporate economist with Navy Federal Credit Union. “Especially considering December was revised up strongly, the rolling average of consumer spending remains solid,” Frick added.


The market isn’t going to improve drastically until the war in the Ukraine ends, imo. So hang tight folks. I expect a very strong market in 6-12 months you watch

[IanH]

Just gtfo with the "trump will make the markets better" bull crap. We all know that's what you are saying.

Its not grounded in reality and it's not relevant to the thread.

[IanH]

The dollar inflated 16% 2021 to today. S&P went up 60%

Your politics would dictate that the president during that time had nothing to do with that. Regardless of whether that is true, the same standard must be applied to today. "President has nothing to do with it"

Our best case scenario is that the markets do the same thing they did for the past 5 years. That is highly unlikely.