Morning Roundup

By Mark Masterson on March 17, 2025

Good morning,

Below are the news items moving markets today:

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Executive Summary

Happy Monday!  Happy St. Patricks Day as well……

Here are the key events to watch this week…..

1. February Retail Sales data – Monday

2. February Housing Starts data – Tuesday

3. Fed Interest Rate Decision/Statement – Wednesday

4. Initial Jobless Claims data – Thursday

5. Philly Fed Manufacturing data – Thursday

6. February Existing Home Sales data – Thursday

No doubt – the Fed meeting will be key this week.  A hawkish Fed will hit markets.  A more dovish Fed will help markets.  Which will it be?

Will the Fed focus on the weakening economic data – or the will they focus on the persistent inflation that is not yet moving lower?

We will find out Wednesday.

• FOMC concluding its March meeting on Wednesday 19-Mar, with statement and new Summary of Economic Projections (SEP) released at 2pm Eastern;
• Market broadly expects rates to remain on hold.
• Analyst previews see few major changes to the statement, though possibly some downgrade in language about economic activity.
• Possibility officials may discuss (or even announce) a pause to balance-sheet runoff until debt-ceiling debate is resolved.
• Analysts suggest lighter median growth forecasts in the SEP, but some increase in inflation expectations (though these could be muted until tariff policies become clearer).
• Powell seen unlikely to deliver any specific guidance, but may stay close to recent remarks Fed is well positioned to wait for greater clarity, and is in no hurry to make adjustments.

The economic data seems to be slowing.

This morning it was retail sales with the miss

• Headline February retail sales increased 0.2% m/m vs expectations for a 0.7% rise, while January’s reading revised down to -1.2% (was -0.9%).
• Retail sales ex-autos up 0.3% vs consensus 0.4% and January’s downwardly revised -0.6% (was -0.4%).

Elsewhere, the NY Fed’s March Empire State Manufacturing Index fell 26 points to -20.0 vs consensus for a +1.5 reading.  

The data continues to weaken.  Take a look at the below chart…..

Unemployment expectations are falling hard. (the red line)

Notice how the actual payrolls in gray typically follow.  If that happens – expect the jobs data to get ugly in the coming months….

H/T @RenMacLLC via @dailychartbook 3 16 25

Yet….often when sentiment is this ugly for unemployment – it is nearing a bottom….take a look…

Sentimenttrader.com 3 17 25

Consumers are getting worried as well…..

Below chart shows the Consumer 12-month expectations for business conditions: they have plunged to the most bearish in history

Barchart 3 17 25

Yet, remember that sentiment is a contrarian indicator many times. 

The last few times the consumer was so negative on business conditions – it ended up being the bottom for that indicator…

3/17/25

Meanwhile, back in Washington…..

• Trump says reciprocal tariffs and sector-wide tariffs coming on 2-Apr – Bloomberg
  • Bloomberg reported on President Trump’s remarks to reporters on Sunday night, noting that both reciprocal tariffs and sector-specific tariffs will be imposed on 2-Apr.
  • Trump has already previewed the 2-Apr date for an announcement on reciprocal tariffs and has previously threatened tariffs on products including autos, pharmaceuticals, chips, copper and lumber.

• Trade/tariffs:
  • Trump says reciprocal tariffs and sector-wide tariffs coming on 2-Apr (Bloomberg, Reuters )
  • Trump’s trade wat with Europe puts $9.5T at risk with damage likely to spread beyond whiskey and Champaigne (link)
• Washington:
  • Trump signs funding bill to avert a US government shutdown (NBC)
  • Trump to meet oil executives at White House this week (Bloomberg)

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Articles of Interest:

• Markets:
  • Trump’s moves boost overseas stocks, with US equities now trailing major markets in Europe and China (NY Times, link )
  • Some investors shift investment strategies as US stock market sours on Trump (NY Times )
• Central banks:
  • Powell faces balancing act of reassuring investors about economy, while showing readiness to act (Bloomberg, FT )
• Economy:
  • Salary difference between those who stay in their positions and those who change jobs has collapsed to lowest level in ten years (link)
• Geopolitics:
  • Trump to discuss Ukraine ceasefire with Putin in crucial call Tuesday (Politico, FT, Reuters )
  • US says it will keep hitting Houthis until shipping attacks stop (Reuters )

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Charts of the day:

Interesting chart about the changing nature of market leadership.

It always changes.

Yet, at the peak of one leadership period – it never seems possible that today’s leaders could lag.

Some stats…..

Avg S&P 500 tenure:

• In 1957 – 61 years
• In 1980 – 36 years
• Today – 20 years
• Every 5 years there are 3-4 new companies in the top 10

How many stocks in the top 10 of the S&P 500 will be there in 10 years?https://awealthofcommonsense.com/2025/03/the-top-10-stocks-in-the-sp-500/

Take a look. 

Today its tech, tech, tech.

I suspect 5-10 years from now – that will look very different.

Imagine energy, industrials, real assets, commodity stocks taking the leadership mantle. 

Ycharts 3 17 25

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Quote of the day:

“Government does not solve problems; it subsidizes them.” – Ronald Reagan