The Honeymoon is Over

Risk-on “Trump Bump” has faded away

Highlights

• Risk-on “Trump Bump” has faded away

• Fiscal drag from DOGE spending cuts would be significant

• Increasing rate cut bets reflect the negative perceptions about the U.S. economic outlook

• Fiscal stimulus expectations in Europe help support regional stocks

Key Takeaways

• Powell's Optimism Goes Against Reality: “Recent indicators suggest that economic activity has continued to expand at a solid pace.” That was Jay Powell at his semi-annual Congressional testimony on February 12^th. Little more than two weeks later, the Atlanta Fed Nowcast takes a hatchet to Q1 real GDP from +2.9% at that time to -1.5% today. Either the Fed Chairman needs to seek out a new adjective or Webster’s needs to change the definition. I’m starting to lean towards a May rate cut.