04 Apr TLR Week in Review: April 4, 2025

Welcome to this week’s edition of The Lonely Realist Week in Review. The past week saw major turbulence in global markets, driven by an escalating U.S.-led trade war that rattled investor confidence. Equities plunged worldwide – marking the worst week since 2020 for U.S. stocks – even as fresh data showed surprising strength in the American labor market. Meanwhile, inflation continued to cool toward central bank targets, but new tariff actions threaten to reignite price pressures. In this recap, we cover key developments across monetary policy, markets (stocks, bonds, commodities), geopolitical tensions, and economic data, along with insights on what they might mean going forward.

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Escalating Trade War Sparks Market Selloff

Sweeping Tariffs and Retaliation: Trade policy leapt to the forefront as the U.S. administration unveiled sweeping new import tariffs, dramatically escalating global trade tensions. President Trump signed an executive order imposing a 25% tariff on all automobiles not made in the U.S., effective April 3, with coverage expanding to auto parts by next month​. This move was a prelude to a broader April 2 announcement outlining “reciprocal tariffs” on a country-by-country basis​. In effect, the U.S. slapped a 10% duty on most imported goods and even higher levies on dozens of countries, erecting the steepest trade barriers in over a century​. Major U.S. trading partners quickly hit back. Notably, China retaliated on Friday with a 34% tariff on American exports, confirming fears of a full-blown trade war​. Even allies like Europe were caught in the crossfire – EU officials expressed outrage at being among the targets of the new U.S. tariffs​. Investors who had hoped the tariff threats were merely a negotiating tactic grew alarmed as tit-for-tat measures accumulated “deeper into the detail and more dangerous for companies,” as one investment manager described​.

Market Reaction – Stocks Plunge: Global markets responded with a violent selloff, erasing trillions in market value within days. U.S. equities suffered their worst plunge since the March 2020 pandemic shock. The S&P 500 collapsed roughly 9% over two sessions, a $4+ trillion loss in market cap that “exceeded a two-day loss of $3.3 trillion in March 2020”​. On Friday alone, the Dow Jones Industrial Average nosedived over 2,200 points (a ~5.5% drop) while the S&P 500 sank 5.97%, and the tech-heavy Nasdaq Composite fell 5.8%​. This sell-off put the Nasdaq on the brink of a bear market (down ~20% from its peak) and pushed the broad S&P 500 toward its largest weekly loss since 2020​. Volatility spiked as investors scrambled to reprice risk; sectors with heavy trade exposure were particularly hard-hit. For example, automaker and industrial stocks plunged on the tariff news, and the S&P 500 energy sector dropped over 8% in a day amid fears of slowing global demand​. In Europe, the pan-European STOXX 600 index plummeted 5.1% on Friday – its worst day since the COVID crash – and is now over 10% below its recent all-time high, putting European stocks in correction territory​. Japan’s Nikkei also fell ~2.8% for a second straight session​.

Flight to Safety – Bonds and Currencies: As equities tumbled, investors fled to safer assets. Government bond prices surged, driving yields sharply lower. The U.S. 10-year Treasury yield plunged to around 3.93%, its lowest level in six months​. (It briefly dipped to 3.86% intraday before rebounding.) This reflects a dramatic weekly drop of nearly 40 basis points from mid-week levels, as markets began to anticipate that the Federal Reserve will need to cut interest rates later this year to cushion the economy. Indeed, futures markets are now pricing in about 110 bps of Fed rate cuts by year-end, up from 75 bps just a week ago​. Yields fell across the curve and globally – Germany’s 10-year Bund yield slid ~0.17%, and UK gilts rallied – amid expectations that other central banks (Bank of England, European Central Bank) will also ease policy if the trade war threatens growth​. In currencies, the U.S. dollar initially weakened on Thursday but then rebounded strongly by week’s end​. The Dollar Index jumped 0.9% Friday (its best day since 2022), reflecting both a move to cash and the greenback’s safe-haven status​. The euro and yen both fell against the dollar​, as traders speculated the Fed may ultimately have slightly more room to cut rates (supporting the dollar) or that Europe and Asia could be disproportionately hurt by trade disruptions.

Historic Context and Sentiment: The speed and scale of this market rout drew comparisons to past crises. The two-day U.S. stock loss was “a record…for the benchmark, exceeding” even the worst of the early pandemic panic​. Oil markets also flashed warning signs of a potential global slowdown. Crude oil prices dove to their lowest in over three years: benchmark Brent settled around $65.6 and U.S. WTI at $61.99, each down 6–7% on the day​. Tumbling oil (and copper and other commodities) underscored weakening demand expectations as the trade war raises recession risks. In contrast, gold prices (not explicitly reported this week) likely found support mid-week as a classic haven, though the late-week dollar surge capped gains. Market internals showed breadth turning overwhelmingly negative – on U.S. exchanges, decliners outnumbered advancers by roughly 7-to-1 at the height of the sell-off. Some Wall Street strategists noted that investor sentiment, while shaken, hasn’t turned to outright panic yet, which “might be a bad thing” if it means there is still complacency to wash out​. Anecdotally, many fund managers are raising cash. “In this kind of environment, let’s go to cash and wait it out,” advised one investment partner​, reflecting a desire to see clarity on trade policy before stepping back into volatile equity markets.

Policy Responses and Outlook: The rapid escalation of tariffs has put policymakers in a difficult spot. Federal Reserve Chair Jerome Powell acknowledged the situation in remarks on Thursday, noting the new tariffs are “larger than expected” and warning that the economic fallout – higher inflation and slower growth – “likely will be as well”​. This suggests the Fed may revise down its growth forecasts and up its inflation projections. So far, Fed officials are striking a cautious tone: they have signaled a “wait-and-see” approach, not keen to raise rates further but also not rushing to cut “given the uncertainty surrounding tariffs”​. The emerging consensus is that if the trade shock worsens and financial conditions tighten significantly, the Fed could pivot to easing later in 2025 – a dramatic shift from just a year ago when inflation was the primary concern. Outside the U.S., other central banks are likewise bracing for impact. The ECB, which had been edging up rates to combat inflation, may pause or reverse course if Eurozone growth is imperiled (more on inflation trends below). In the political arena, pressure is mounting on the White House to mitigate the damage. The administration has hinted at potential pro-growth measures (such as tax cuts or infrastructure spending) to offset the drag from tariffs​. Whether such fiscal stimulus will materialize remains uncertain, especially given likely resistance in Congress and the long lead times for investment to bear fruit. For now, global markets are left to navigate an environment of elevated uncertainty. As one analyst put it, these developments are “the worst fears of where the tariff program was headed” coming to pass​. Until there is a diplomatic breakthrough or clear rollback of the trade barriers, volatility may remain high and risk assets under pressure.

U.S. Economic Data: Job Growth Surges Amid Uncertainty

Against the backdrop of trade turmoil, the underlying U.S. economy showed resilience. The marquee economic release this week – the March jobs report – came in much stronger than expected, underscoring the labor market’s continued momentum. Nonfarm payrolls jumped by 228,000 in March, nearly double economists’ consensus forecast (~130,000)​. This marked an acceleration from February’s revised 117,000 gain, and well above the average monthly job growth of ~158,000 over the prior year​. Notably, hiring was broad-based: health care added 54,000 jobs, social assistance +24,000, transportation and warehousing +23,000, and retail trade +24,000 (the latter boosted by workers returning from a strike)​. Even the manufacturing and construction sectors held steady despite global headwinds. The only significant declines were a modest loss of 4,000 in federal government jobs​, as well as a continued slide in warehousing (-9,000).

Crucially, this robust job creation coincided with stable unemployment and moderate wage growth, suggesting the economy may be adding jobs without stoking excessive inflation. The unemployment rate edged up slightly to 4.2% (from 4.1% in February), essentially holding in the tight 4.0–4.2% range it has been in since mid-2024​. The uptick in joblessness to a still-low 4.2% could actually reflect a bit of good news: labor force participation was unchanged at 62.5%, near its highest in years, meaning more workers are coming off the sidelines and being counted in the labor force​. Wage growth remained moderate. Average hourly earnings rose 0.3% in March, keeping the year-over-year pace at +3.8%​. This is a deceleration from the 4–5% wage inflation seen last year, indicating that while workers are enjoying pay increases above pre-pandemic norms, the trend is not accelerating dangerously. In fact, wage gains are roughly in line with productivity plus the Fed’s 2% inflation target, which is a welcome sign for those worried about a wage-price spiral. The average workweek held steady at 34.2 hours​, implying businesses haven’t (yet) cut hours in response to softer demand.

Table: U.S. March 2025 Employment Report Highlights​

The much stronger-than-expected payroll gain suggests the economy had solid momentum heading into spring, despite rising interest rates and external uncertainties. As a senior economist quipped, the labor market “added far more jobs than expected in March”, but that “did little to brighten the mood” on Wall Street given everything else going on​. Indeed, under normal circumstances such a blowout jobs report might spark worries that the Fed would need to hike rates more. However, with the overhang of the trade war and financial market stress, investors instead largely shrugged off the good news.

Labor Market Outlook: The durability of job growth will be tested in coming months. There are early signs that hiring could cool somewhat – for instance, consumer confidence and business surveys have softened, and major companies (especially in manufacturing and export-oriented industries) may reassess hiring plans amid the tariff uncertainty. Initial jobless claims, a leading indicator, have ticked up off their lows (though they remain historically low). That said, fundamentals in the job market remain strong: there are still roughly 1.5 jobs open per unemployed worker (per JOLTS data), and layoff rates are low. The slight rise in unemployment to 4.2% bears watching, but so far it’s within the range of normal variance. Fed officials will take comfort that there is some slack reappearing – for example, the number of long-term unemployed (1.5 million) and those working part-time for economic reasons (4.8 million) changed little in March​, indicating no sudden deterioration. Bottom line: the U.S. labor market is still running hot by historical standards, but is not tightening further at the moment. This gives the Fed some breathing room. However, if the trade war leads to a demand slowdown or if businesses freeze hiring to cut costs, we could see job gains moderate in the summer. For now, the March report’s message is one of resilience – America’s job engine is chugging along, even as storm clouds gather abroad.

Inflation and Monetary Policy Developments

Cooling Inflation (For Now): Inflation readings out this week showed a continued gradual cooling, even falling closer to central bank targets – a positive trend that could be challenged by the new tariffs going forward. In the U.S., the latest data for February 2025 confirmed that price pressures have eased significantly from last year’s highs. The Consumer Price Index (CPI) rose just 0.2% in February (seasonally adjusted), and the year-over-year CPI inflation rate slowed to 2.8%, down from 3.0% in January​. This is the lowest annual inflation in over two years and only slightly above the Fed’s 2% goal. Core CPI (ex-food & energy) was a bit higher at 3.1% y/y, but it too is trending lower. Key drivers of the February disinflation included cheaper gasoline (-1.0% on the month) and airfare (-4.0%), while shelter costs – which had been the dominant source of inflation – rose a more moderate 0.3%​. Similarly, the Fed’s preferred gauge, the Core PCE Price Index, came in at 2.8% year-on-year in February, a tick above forecasts (2.7%) and January’s 2.7%​. The slight uptick in core PCE (which excludes food/energy) got attention because it broke the downtrend, but overall headline PCE inflation held at 2.5%, the same as the prior month​. In other words, by late winter the U.S. had basically achieved headline price stability – a remarkable comedown from the ~9% inflation peak of mid-2022.

Tariffs Cloud the Outlook: However, the trade war presents a new upside risk to inflation. Tariffs act like a tax on imports, raising costs for businesses and consumers. Fed Chair Powell noted the latest tariffs will likely push inflation higher even as they also slow growth​. Many economists echoed that concern: “inflation came in a little hotter…not terribly hot. The Fed is reluctant to cut rates…especially with new tariffs” one strategist commented​. There is even talk of a possible mild stagflation scenario if the economy loses momentum while import prices jump. “Inflation is still lurking…tariff impact is driving inflation now,” warned one portfolio manager, who also observed that consumers and firms may rush to stockpile goods ahead of tariffs, temporarily boosting demand and prices​. This front-loading effect could make inflation data noisy in coming months. The bottom line for the Fed is that their job controlling inflation just got more complicated: core inflation is hovering in the high-2% to 3% range – not far above target, but not yet at 2% – and could re-accelerate if tariffs stick. Fed officials this week reiterated that they need to see inflation “truly back to 2%” before considering rate cuts, and the latest PCE uptick “isn’t going to speed up” their timeline​. Thus, the Fed is likely to hold its policy rate steady at the current restrictive level (around 5.25%) for longer, even as markets bet on eventual cuts. If the economy markedly deteriorates, the Fed may have to prioritize growth and cut rates despite any tariff-induced inflation blips – a delicate balancing act.

Global Inflation and Central Banks: The U.S. isn’t the only place experiencing an inflation comedown. In the Eurozone, annual inflation eased to 2.2% in March, the lowest since late 2024 and slightly under expectations (2.3%)​. This is a big improvement from a year ago when Eurozone inflation was above 7%. However, much like in the U.S., core inflation in Europe remains stickier – services inflation is running ~3.4%​ and core measures (excluding energy/food) are estimated around 4%+. The European Central Bank had been raising rates in response, but with headline CPI now near target and Europe’s economy vulnerable to the trade conflict (especially its export industries like autos), traders ramped up bets that the ECB will pause or even cut rates if needed​. The Bank of England faces a similar dilemma: UK inflation is still above 3%, but Brexit-related trade concerns and now global tariff spillovers could force a policy rethink. Both the ECB and BoE meet in the coming weeks, and their guidance will be closely watched. In emerging markets, the inflation picture is mixed – China’s inflation is benign (~1% y/y recently), giving the People’s Bank of China room to ease policy to support growth if its exports are hurt. On the commodity front, the plunge in oil prices this week, if sustained, will feed through to lower energy inflation in coming months (a silver lining for consumers). In fact, U.S. gasoline prices are down year-on-year, and heating oil and natural gas have also moderated, which should help keep headline inflation in check barring a major supply shock. We should note, however, that OPEC+ could respond to the oil price slide: analysts speculate the cartel may announce production cuts or other measures to shore up prices if crude stays near 3-year lows. Any such move would again complicate the inflation outlook.

Monetary Policy – A Turning Point? We are likely at an inflection point for global central banks. After an aggressive tightening cycle in 2022–2024 to tame inflation, policymakers are now shifting to a more dovish bias, given the combination of softening inflation and rising growth risks. In the U.S., the Fed’s next meeting is weeks away, but already its tone is cautious. As Morgan Stanley’s chief economist summarized, it looks like the Fed has “more waiting to do” – the latest data “wasn’t exceptionally hot” but with tariff uncertainty, there’s no rush to pivot dovish either​. Essentially, the Fed is in a holding pattern: ready to intervene if the economy falters, but also prepared to hold rates high if inflation surprises on the upside. The dramatic repricing in bond markets (with rate cuts now anticipated) is a sign that investors believe central banks will ultimately blink and support growth if needed. This week’s events might indeed mark the start of a policy easing cycle by late 2025 – albeit one forced by external shocks rather than purely by achievement of the inflation goal. We will learn more about the Fed’s thinking when the minutes of its last meeting are released next Wednesday, and when Chair Powell testifies to Congress later this month. For now, monetary policy is on pause as everyone assesses how damaging this trade war could get.

Sector and Financial Market Trends

Equities – Winners and Losers: Virtually all sectors of the stock market fell this week, but those most exposed to trade disruptions were hit hardest. Manufacturing-heavy and globally integrated industries saw the steepest declines. For example, U.S. automotive stocks plunged after the tariff announcement on imported vehicles – shares of major automakers and suppliers dropped well into double-digit percentage losses over the week, as investors feared higher input costs and retaliation (European and Asian carmakers also sank). The technology sector – which relies on complex international supply chains – also underperformed; chipmakers and hardware firms with China exposure led declines. Meanwhile, more defensive and domestic-focused sectors held up better. Healthcare stocks, for instance, were comparatively resilient (some even rose), as they have minimal direct tariff impact and tend to be counter-cyclical. Financials were a mixed bag: banks initially sold off on recession fears (the S&P 500 financial index shed ~6.8% on the week)​, but some investors see longer-term opportunity in financials given their improved valuations and the potential for pro-growth policies (e.g. deregulation or tax cuts) that could benefit banks​. One investment strategist recommended “balance between growth and value” stocks now and specifically highlighted health care and financials as sectors with attractive valuations and less tariff exposure​.Energy companies saw their stock prices slide ~8% in line with the oil price drop​. Airlines and transportation firms faced a double whammy of higher fuel costs (tariffs on imported jet fuel) and weaker demand outlook, pressuring their shares. On the flip side, one minor beneficiary of the turmoil were precious metals miners, which gained as gold prices firmed. Also, companies insulated to U.S. domestic demand – such as some utilities, telecoms, and regional retailers – outperformed the broader market (some ending flat to slightly down for the week).

Credit and Rates: In credit markets, corporate bond yield spreads over Treasuries widened moderately, reflecting increased risk aversion. However, there were no signs of dysfunction – investment-grade and high-yield bonds traded in orderly fashion, aided by the decline in Treasury yields. Notably, mortgage rates fell in tandem with the drop in long-term Treasury yields, which could provide some relief to the housing sector. The average 30-year fixed mortgage rate is now back under 6.5%, down from around 7% at the start of the year. This week also saw a stark yield curve steepening: earlier in March, the yield curve (2-year vs 10-year) was inverted by as much as 50 bps, but by Friday the gap had nearly closed as short-term yields fell on rate cut bets. A more normal curve often presages easier monetary conditions ahead, although in this case it’s being driven by worries about a downturn.

Commodities: Beyond oil, other commodities were volatile. Industrial metals like copper fell on fears that a trade-induced global slowdown will hurt demand (copper hit a 6-month low). Agricultural commodities actually saw a bounce mid-week – traders speculated that Chinese tariffs on U.S. farm goods could shift trade flows (e.g. soybeans rallied on the possibility of China stockpiling from South America, while U.S. corn prices fell on expected lost exports). Gold hovered around $1,950/oz, up earlier in the week as a safe haven bid, but gave back some gains on Friday as the dollar strengthened. Cryptocurrencies: Interestingly, crypto markets did not serve as a haven – Bitcoin fell about 5% this week, mirroring the risk-off move in tech stocks, and reminding investors that crypto can behave more like a speculative asset than a defensive one in times of stress.

Investor Sentiment and Positioning: The sudden nature of this shock left many investors off guard. Measures of volatility spiked – the CBOE VIX index jumped above 30 for the first time since late 2023. However, there were reports that institutional investors are not yet in full panic mode. One market volatility index that tracks trading activity of hedge funds and other big players showed only a modest uptick, prompting some analysts to caution that “investors are not panicking…That might be a bad thing” if it means the selloff isn’t over​. Indeed, some recall that during the 2020 and 2008 crashes, true capitulation didn’t occur until investors were extremely bearish. On the other hand, Warren Buffett’s Berkshire Hathaway reportedly sat on a $300 billion cash pile coming into this year​, which could imply that some savvy investors have dry powder to deploy if valuations become attractive. It’s also worth noting that algorithmic and quant-driven funds likely contributed to the speed of the decline – as certain technical levels were breached, automated selling intensified.

Looking ahead, market participants are nervously eyeing upcoming catalysts. The new tariffs are set to officially take effect next week, and analysts warn that earnings season (kicking off mid-April) could feature cautious outlooks from CEOs regarding the trade situation. Merger and acquisition activity has also chilled – global dealmaking is essentially on hold. If there is a silver lining, it’s that such a rapid correction can also create opportunities. Equity valuations, especially in some cyclicals, have quickly moved from expensive to reasonable. Should any positive news emerge – for example, hints that the U.S. and China might negotiate a currency agreement or trade truce (there was speculation of a “push for [a] yuan deal as part of trade relief”​) – markets could rebound just as fast as they fell. For now, caution prevails.

International Developments and Geopolitics

Aside from the U.S.-China trade clash, several other global developments unfolded:

• Europe: As mentioned, Europe is grappling with the fallout of U.S. tariffs on its exports. Germany, which has a large auto sector, could see a tangible hit to GDP if the U.S. auto tariffs persist (the auto sector accounts for ~7% of the DAX index versus 2% of the S&P 500)​. The EU has threatened retaliatory tariffs of its own on American products like motorcycles, whiskey, and jeans – evocative of the 2018 trade tensions. Meanwhile, the U.K. saw a major political development with the government announcing a budget aimed at investment and lower energy costs; however, this was overshadowed by global events. On the economic front, Eurozone unemployment held at a record low ~6.5%, and the ECB indicated it stands ready to provide liquidity if needed to calm markets.
• Asia: In China, aside from its tariff response, the government is trying to stabilize its economy. Beijing hinted at possible currency intervention or adjustments – perhaps devaluing the yuan to offset tariffs, though that carries risks of capital outflow. Chinese PMI data for March came in mixed: official manufacturing PMI slipped just below 50 (signaling a stall in factory growth), while the services PMI remained expansionary. China’s leadership struck a defiant but measured tone, stating they “do not want a trade war but are not afraid to fight one,” and also rolled out modest stimulus (such as tax rebates for exporters) to support businesses. Elsewhere in Asia, Japan and South Korea are contending with collateral damage from the U.S. tariffs (both are in the top 10 list of countries targeted​). Japan’s yen initially strengthened on safe-haven flows during the worst of the equity rout, but then weakened back as the dollar bounced; Japan’s central bank is likely to maintain its ultra-easy policy, especially if global growth falters. Emerging Markets broadly saw capital outflows this week – funds flowed into U.S. Treasuries and money markets at the expense of EM bonds/stocks. Currencies like the Indian rupee and Brazilian real fell ~1–2%. However, emerging economies that import a lot of commodities could benefit from lower prices if the slowdown materializes.
• Geopolitical Tensions: The Russia-Ukraine war persisted into its second year, although it took a backseat in headlines. There were no major breakthroughs on the battlefield this week – fighting remains intense in eastern Ukraine. One development of note: OPEC’s de-facto leader Saudi Arabia has been mediating between Russia and Ukraine on some humanitarian issues, a sign of shifting diplomatic roles. Also, Iran and the U.S. engaged in indirect talks around a possible prisoner swap and nuclear deal framework, which, if successful, could eventually lead to more Iranian oil on the market (another factor for oil prices). In the Americas, Brazil’s new government hosted a summit of South American nations, focusing on trade cooperation – a somewhat ironic backdrop as the global trade order is in flux. And in the U.S. domestic political scene, the partisan fight over the federal debt ceiling appears to be looming; the Treasury is projected to run up against the borrowing limit later this summer (earlier than expected, partly due to revenue shortfalls), and any brinkmanship in Washington could add further volatility to financial markets. For now, this issue is on the radar but was eclipsed by the immediate trade drama.

Looking Ahead

In summary, it was an extraordinary week: a cascade of protectionist policies and counter-measures upended markets, even as economic data showed pockets of strength. The U.S. economy continues to exhibit positive momentum (strong job growth, cooling inflation), but confidence is fragile as investors weigh how long that can last if a trade war drags on. The coming weeks will be critical in determining the trajectory from here. Key things to watch include:

• Any signs of negotiation or backpedaling on tariffs. Markets will breathe a sigh of relief if the U.S. and its trading partners signal a compromise or even a temporary freeze on further tariff increases. Absent that, corporate earnings calls may be filled with talk of supply-chain shifts and profit margin hits.
• Upcoming economic data: Consumer sentiment gauges for April (preliminary University of Michigan index due next Friday) will show how much the headlines are scaring households. Also, the March consumer price index (CPI) release on April 10 will be closely watched – if core inflation drops again, it could give the Fed cover to stay on hold or ease if needed. Conversely, any jump (perhaps from initial tariff impacts on prices) would complicate policy.
• Central bank communications: We will hear from multiple Fed officials and see the ECB’s and BoE’s rate decisions in the next two weeks. Expect a dovish tilt, with officials emphasizing flexibility. Jerome Powell’s comments this week about tariff fallout​suggest the Fed is prepared to act if financial conditions worsen materially. Indeed, bond markets may have gotten ahead of themselves in pricing aggressive Fed cuts – any pushback from the Fed (reminding that they won’t cut unless absolutely necessary) could cause yields to bounce and stocks to find a footing.
• Market technicals: With the S&P 500 now around the 5100 level, traders are eyeing key support levels. The next major support might be the 5000 mark (a psychological level), and below that the 4800 area, which was roughly the pre-rally level from late 2024. On the upside, volatility makes resistance levels less clear, but retracing even half of this week’s decline would be a relief. Volatility indices and credit spreads will indicate if stress is contained or spreading.
• Government response: There is already talk in Washington of possible relief for farmers (who are hit by lost exports) and affected industries. Any fiscal stimulus measures – or conversely, prolonged political battles like a debt ceiling standoff – will feed into the macro outlook.

Despite the current turmoil, it’s worth remembering that the economic fundamentals entering this episode were relatively solid. Consumer spending had been healthy (albeit slowing in February amid bad weather​), and corporate profits were on track to rise modestly this year​. If the trade war can be de-escalated, even partially, there is room for a strong relief rally and a pickup in investment. If not, the focus will shift to how much damage containment can be done via policy easing and fiscal moves. Either way, this week has proven that we’ve entered a new, more volatile phase for the global economy, one where politics and economics are tightly interwoven. Investors and policymakers alike will need to stay nimble as we navigate the fallout in the weeks ahead.

This is The Lonely Realist Week in Review, brought to you by Centennial Quantitative. Stay tuned for more insights as we continue to cut through the chaos with a sober, pragmatic perspective on the economic and investment landscape.