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Tariff Headwinds and a Growth Scare Rock Risk Assets

by Fortem Financial March 3, 2025

Global financial markets have hit a rough patch as the cumulative impact of President Trump’s trade and related economic threats are fueling concerns that he will diverge from the pro-growth script that he initially followed during his first term. Then, the positive economic elements arrived first, primarily tax cuts, before the negative actions followed, i.e., a brief trade war. These negative actions caused a downturn in global trade and slowed the U.S. economy and corporate profits.

The U.S. economy could be in a lose-lose scenario for equities: Growth slowing below trend will increase unemployment, but re-accelerating growth would be inflationary.

The February Conference Board Consumer Confidence Index missed estimates for the third month in a row as expectations worsened and further labor market loosening was evident.

Roughly $500 billion of liquidity is entering the financial system in Q1, which is working as a financial cushion to the policy uncertainty lowering bond yields and the dollar.

We continue to see policy headline risk remaining elevated over the near term as the White House adjusts policy decisions in real time. As tariff policy continues to be highly fluid and uncertain, we see continued whipsaw rotations and potential for further downside to risk assets.

Through last Thursday, the average Magnificent Seven stock is down 8%, while the S&P 500 is flat. Capex increases are now eating into the margins of mega-cap tech stocks and beginning to hurt their strong free cash flow attraction.

The U.S. House of Representatives narrowly passed a FY2025 budget resolution that aims to provide U.S. $4 trillion in tax cuts and U.S. $2 trillion in spending cuts over the 2026-35 period.

Source: Bob Doll Crossmark CEO, CIO

 

Market and Index Changes for the Week Ending 2/28/2025

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments. Data provided by Refinitiv.

 

 

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Brian Amidei, along with Partners Joseph Romano and Brett D'Orlando have also been named *2014, 2015, 2016, 2017, 2018 Five Star Wealth Managers!

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Five Star Professional Disclosure:
The Five Star Wealth Manager award is based on 10 eligibility and evaluation criteria: 1) Credentialed as an investment advisory representative (IAR) or a registered investment advisor; 2) Actively employed as a credentialed professional in the financial services industry for a minimum of five years; 3) Favorable regulatory and complaint history review; 4) Fulfilled their firm review based on internal firm standards; 5) Accepting new clients; 6) One-year client retention rate; 7) Five-year client retention rate; 8) Non-institutionalized discretionary and/or non-discretionary client assets administered; 9) Number of client households served; and 10) Educational and professional designations. The inclusion of a wealth manager on the Five Star Wealth Manager list should not be construed as an endorsement of the wealth manager by Five Star Professional or the magazine. The award methodology does not evaluate the quality of services provided. Additional information about this award is available at: fivestarprofessional.com/2016FiveStarWealthManagerMethodology.pdf
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Data Sources: News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market Data: Based on reported data in WSJ Market Data Center (indexes); U.S. Treasury (Treasury Yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness.

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The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighed index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

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