Tariffs
Core PCE inflation was tame this morning, but with large tariffs looming we anticipate loftier inflation readings in the months ahead.
Trump’s ceasefire talks are positive for Germany – and so was the German election result. But Trump’s tariffs will hit Germany soon. Investors should use near-term volatility to increase exposure to Germany.
US growth has slowed in recent weeks. This can be seen in the weaker data on retail sales, consumer confidence, services PMIs, and a swath of housing releases (notably starts, existing home sales, homebuilder confidence, and stock prices). It can also be seen in the decline in GDP tracking estimates. The Atlanta Fed's GDPNow model projects growth of 2.3% in Q1, down from a peak of 3.9% on February 3. The Citi US Economic Surprise Index has also dipped into negative territory.
This week’s report discusses the questions we were asked most frequently when we met with investors in the Midwest two weeks ago. We reiterate our pessimistic fundamental take and our neutral asset allocation recommendations.