Stagflation Risks on the Rise

Stagflation is not our base case, but the risks are on the rise

Highlights

• Stagflation is not our base case, but the risks are on the rise

• Consumers will bear a large share of tariff-induced price increases

• Companies slash outlook amid increasing uncertainty

• Growth and cyclical equity names are breaking down

Key Takeaways

• Stock Market Decline and Trade War Woes: The Dow fell by -1.1% in Tuesday's trade, now clearly below the 200-day trendline and hitting a six-month low intraday. The S&P 500 index sank -0.8%. The Nasdaq Composite declined by -0.2% after rising more than +1.0% at the session highs. The S&P 500 Equal Weight index fell by -1.3%, hitting a six-month low. Most growth names have broken down. Perhaps someone should inform the President that nobody wins in a trade war.