Market Musings 3/13/2025
Quick thoughts on the markets and major portfolio news. Not on Ursa yet? Download Ursa from the App Store!
Improving #Inflation optimism fades as the #Tariffs trade war escalates
So, finally some good news! Both the CPI and PPI February #Inflation data came in better-than-expected.
We got a look into producer pricing Thursday－basically what companies are paying for costs of goods and services. The Core PPI in February slowed to +0.2%. This decelerated from last month’s +0.3% and expectations to maintain that pace.
Meanwhile, on the consumer front Wednesday, aka the prices we pay, the Core CPI in February grew +0.2% M/M. This growth was considerably slower than the +0.4% last month and below forecasts for +0.3%.
#Inflation is still higher than the Fed’s target, but January’s spike now feels more like just an outlier. However, we do caution that the data is unlikely factoring in all the #Tariffs that went into effect this month and in the future.
While markets tried to rally a bit Wednesday on the #Inflation good news, #Tariffs once again dominates headlines. Despite the good PPI data today, shares tumbled as the #Tariffs trade war escalates now between the US and EU. The S&P 500 has now joined the NASDAQ in a market correction.
While only broad steel and aluminum global #Tariffs are in effect so far with vague reciprocal #Tariffs still TBD, the EU has already retaliated with 50% #Tariffs on American whiskey along with #Tariffs on beef, poultry, motorcycles, peanut butter and jeans. The White House escalated the trade war tiff further Thursday threatening 200% #Tariffs on wine in return.
Markets were already rattled from the trade war with Canada and Mexico. Starting another fight with the EU only makes things worse.
The White House and EU are scheduled to have a call Friday. Optimistic investors might be hopeful for some deescalation and we wouldn’t be surprised to see some retractions tomorrow afterwards.
However, we’re not seeing any softening in the White House’s approach towards #Tariffs and therefore don’t see the macro stabilizing near-term. In addition, the better #Inflation readings may just be a mirage with the #Tariffs impact still largely unaccounted for.
We’re definitely feeling the US is tipping more and more towards a #Recession. Unfortunately, a market correction may just be the beginning.
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The statements, opinions and analyses presented here are provided as general information. This article is the opinion of the author. Anything within this article should NOT be considered an investment recommendation or advice. See Ursa’s full disclosures here.
Original Photo by Pixabay.