Even as White House wants lower rates (via DOGE, tariffs, etc), they want to avoid "stall speed" or recession, which means White House "put" still exists. Array ( [cookie] => f1837e-8b0faa-c20959-36f121-4c7221 [current_usage] => 2 [max_usage] => 2 [current_usage_crypto] => 0 [max_usage_crypto] => 2 [lock] => [message] => [error] => [active_member] => 0 [subscriber] => 0 [role] => [visitor_id] => 144186 [reason] => Usage under limits [method] => ) 1 and can accesss 1

VIDEO: We believe the White House “put” still exists, as the White House wants to avoid an economy stalling into a recession.

Please click below to view our Macro Minute (duration: 9:39).

Stocks fell under intense selling pressure Thursday, falling 5 of the last 6 trading days. Also yesterday, the White House reiterated its intention for tariffs to go into effect next week, and additionally, President Trump noted an additional 10% tariff would be levied on China. Along with incoming economic data that appears to show “cracks” in growth, added to a day when equities again fell under pressure.

• The White House and Treasury Secretary Bessent noted that White House is measuring the success of its policies by the change in the 10-year yield. And there is logic to this benchmark, rather than purely looking at stock prices. But this has raised questions from investors whether this means there is no White House “put” (“put” meaning the White House does not want to see a larger decline in stocks).

• In our view, a White House “put” still exists. Let me explain, by walking through our rationale:
  – It makes sense the White House wants lower interest rates
  – Consumers benefit from lower 10-year rates = cheaper mortgages
  – Corporates want lower rates to refinance existing loans at lower cost
  – Tariffs could slow economic growth, which in turn, leads to lower interest rates
  – DOGE by cutting gov’t spending lowers employment, which lower interest rates
  – Weaker Jobs likely forces Fed off “hawkish pause” as it responds to weaker jobs
  – But White House wants to avoid Stall Speed in the economy
  – As this raises recession risk, and would require fiscal stimulus (reversing the above)
  – thus, a White House “put” is still in play before economy hits “stall speed”
• Is the economy nearing stall speed? The growth scares over the past week are adding to concerns. And even yesterday’s economic report add to these concerns:
  – initial jobless claims up to 242k, vs 221k last week
  – in DC, hit hard by DOGE, saw 4X rise in claims
  – Kansas Regional Fed report shows net -9% of biz see less sales if tariffs happen
  – and 52% could not raise prices to offset tariffs
• Thus, the market is seeing signs that tariffs would further weaken growth and possibly even cause less inflation. Thus, tariffs might actually force the Fed to become dovish.
• While the Fed officials continues to speak about the need to be inflation vigilant (Kansas Fed Schmid Thursday), the bond market is pricing in a more dovish take:
  – Odds of a May cut are inching higher briefly touching 30% Thursday, up from 10% two weeks ago
  – Total cuts by Dec 2025 are now 2.5, up from 2.2 at start of week and 1.0 just two weeks ago
• So, if economic weakness worsens (jobs next week), we could see the Fed shift towards a dovish Fed. And this Friday is Jan Core PCE.

BOTTOM LINE: Stocks are hit harder than we expected, but probabilities favor we are near end of selling pressure

As for stocks, the question is whether the bad news is baked in. Given the relentless selling over the past week, and the choppy trading since mid-December, the renewed selling is obviously disconcerting. But there are reasons to believe we are in the final stages of this selling:

• From a Technical Perspective, Mark Newton, believes the selling should subside soon:
  “My comments given the choppy trading on Thursday are similar to Wednesday night. I feel like lows should be in place by Monday, 3/3/25, and Equity indices should be set to bottom as February comes to a close.”
• The retail AAII survey shows % net bulls is now -41.2%, the lowest reading since Sept 2022 and the 7th worst ever reading in the survey’s 40-year history. In fact, the clusters of these readings were:
  – 1990s
  – March 5, 2009
  – 2022
• And the average 12M forward gain post- -40 or worse, is +22%, with only 1 negative 12M return (April 2022). So, the risk/reward from this AAII is positive.
• Similarly, the crash in momentum MTUM -1.48%  points to signs that selling is overdone:
  – MTUM -1.48%  is down 6 of last 7 days
  – down 5 consecutive days -5.5% yesterday
  – this is the 7th worst ever decline in past 12 years
  – the other 6 worst instances (ex-2022), average 22% forward 12M gain (all positive)
• The point is that this selling is so sizable and intense, that signs of exhaustion should be emerging.

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Key incoming data February:

• 2/3 9:45 AM ET: Jan F S&P Global Manufacturing PMI Tame
• 2/3 10:00 AM ET: Jan ISM Manufacturing PMI Tame
• 2/4 10:00 AM ET: Dec JOLTS Job Openings Tame
• 2/4 10:00 AM ET: Dec F Durable Goods Orders Tame
• 2/5 8:30 AM ET: Dec Trade Balance Tame
• 2/5 9:45 AM ET: Jan F S&P Global Services PMI Tame
• 2/5 10:00 AM ET: Jan ISM Services PMI Tame
• 2/6 8:30 AM ET: 4Q P Non-Farm Productivity Tame
• 2/6 8:30 AM ET: 4Q P Unit Labor Costs Tame
• 2/7 8:30 AM ET: Jan Non-Farm Payrolls Tame
• 2/7 9:00 AM ET: Dec F Manheim Used Vehicle index Tame
• 2/7 10:00 AM ET: Feb P U. Mich. Sentiment and Inflation Expectation Hot
• 2/10 11:00 AM ET: Jan NY Fed 1yr Inf Exp Tame
• 2/11 6:00 AM ET: Jan Small Business Optimism Survey Tame
• 2/12 8:30 AM ET: Jan CPI Hot
• 2/13 8:30 AM ET: Jan PPI Hot
• 2/14 8:30 AM ET: Jan Retail Sales Data Tame
• 2/18 8:30 AM ET: Feb Empire Manufacturing Survey Tame
• 2/18 10:00 AM ET: Feb NAHB Housing Market Index Tame
• 2/18 4:00 PM ET: Dec Net TIC Flows Tame
• 2/19 9:00 AM ET: Jan M Manheim Used Vehicle index Tame
• 2/19 2:00 PM ET: Jan FOMC Meeting Minutes Dovish
• 2/20 8:30 AM ET: Feb Philly Fed Business Outlook Tame
• 2/21 9:45 AM ET: Feb P S&P Global Manufacturing PMI Tame
• 2/21 9:45 AM ET: Feb P S&P Global Services PMI Tame
• 2/21 10:00 AM ET: Feb F U. Mich. Sentiment and Inflation Expectation Hot
• 2/21 10:00 AM ET: Jan Existing Home Sales Tame
• 2/24 8:30 AM ET: Jan Chicago Fed Nat Activity Index Tame
• 2/24 10:30 AM ET: Feb Dallas Fed Manuf. Activity Survey Tame
• 2/25 9:00 AM ET: Dec S&P CoreLogic CS home price Mixed
• 2/25 10:00 AM ET: Feb Conference Board Consumer Confidence Tame
• 2/26 10:00 AM ET: Jan New Home Sales Tame
• 2/27 8:30 AM ET: 4Q S GDP Tame
• 2/27 10:00 AM ET: Jan P Durable Goods Orders Tame
• 2/28 8:30 AM ET: Jan PCE Deflator

Economic Data Performance Tracker 2025:

Economic Data Performance Tracker 2024:

Economic Data Performance Tracker 2023: