Mon, March 24, 2025 | 7:50AM ET

Over the weekend, tariff war appearing increasingly targeted and a reminder Trump "put" exists. Raises probability of a strong rally in the coming weeks

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VIDEO: There were positive developments over the weekend and we now see the increased probability of a sharp rally starting possibly this week

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Over the weekend, tariff war appearing increasingly targeted and a reminder Trump put exists. Raises probability of a strong rally in the coming weeks

Markets appear to be setting up for a potential face-ripper rally this week as recent developments have eased several of the major fears that have weighed on equities since December.

Trade war concerns are easing, brightening market sentiment.
- Over the weekend, news surfaced that the April 2 tariff deadline will likely result in more targeted trade actions rather than broad tariffs.
  - Bloomberg reported that tariffs are set to be more “focused” instead of “sprawling.”
  - This indicates the administration is preparing a “Liberation Day” scenario, aiming to adjust trade relationships selectively.
    The move suggests that the Trump administration is seeking bilateral deals to correct trade imbalances with specific partners.
- Global equity markets have already been reflecting this improvement:
- Since February 18th, markets in China, Europe, Mexico, and Canada have outperformed the U.S., signaling fading fears of a broad trade war.
Reinforcing this easing of trade fears, key comments from policymakers emphasize targeted measures.
- Kevin Hassett noted on Fox Business that tariffs would focus on a few countries with significant deficits, not on all U.S. trading partners.
- The U.S.’s largest trade deficits are concentrated in:
  - China and Europe overall.
  - Within Europe, Ireland (pharmaceuticals) and Germany (machinery and appliances) lead the list.
  - Mexico and Canada round out the top deficit contributors.
The focus now shifts to macroeconomic data and its implications for the market.
- Tuesday’s release of the Conference Board’s Consumer Confidence Survey will be closely watched as soft data trends persist.
- Friday brings key inflation-related data:
  - February Core PCE, the Fed’s preferred inflation gauge.
  - University of Michigan’s 1-year expected inflation, which has been skewed due to political bias in survey responses.
The Fed put remains active, providing a backstop to market downside.
- Last week, the Fed’s Summary of Economic Projections highlighted a stark shift in growth concerns:
  - 90% of FOMC participants now see downside risks to GDP growth, up from just 45% in December.
  - This sharp shift is twice the level of concern seen three months ago.
- Despite this, inflation risks remain skewed to the upside, with no material change from December.
- Fed Chair Powell reiterated during his press conference that financial conditions are “the main channel to the real economy,” confirming the Fed is monitoring market conditions closely.
  - This reinforces that the Fed put is intact.
Technical signals suggest room for equities to rally further.
- Mark Newton notes that a close above 5,703 on the S&P 500 would mark a key bullish breakout confirmation.
- The market experienced a 10% waterfall decline over 20 days, the fifth fastest since 1950.
  - Historically, similar rapid sell-offs have been linked to market shocks, not fundamental economic downturns.
- Current fears around a tariff-induced recession and a breakdown of the “Trump put” and “Fed put” appear overstated.
Volatility signals remain elevated but could fuel a risk-on shift if they normalize.
- The VIX curve is steeply elevated through September.
  - A collapse in the VIX would likely trigger a re-risking phase as markets regain confidence.
  - This would serve as a catalyst for further equity market recovery.
Below is a list of the macro this week:
– 3/24 Mon 8:30 AM ET: Feb Chicago Fed Nat Activity Index    -0.17e
– 3/24 Mon 9:45 AM ET: Mar P S&P Global Manufacturing PMI    51.8e
– 3/24 Mon 9:45 AM ET: Mar P S&P Global Services PMI    51.0e
– 3/25 Tue 9:00 AM ET: Jan S&P CS home price 20-City MoM    0.40%e
– 3/25 Tue 10:00 AM ET: Mar Conference Board Consumer Confidence    94e
– 3/25 Tue 10:00 AM ET: Feb New Home Sales    680ke
– 3/26 Wed 8:30 AM ET: Feb P Durable Goods Orders MoM    -1.0%e
– 3/27 Thu 8:30 AM ET: 4Q T 2024 GDP QoQ    2.4%e
– 3/28 Fri 8:30 AM ET: Feb Core PCE MoM   0.31%e
– 3/28 Fri 10:00 AM ET: Mar F U. Mich. 1yr Inf Exp
There is also fed speak this week:
– 3/24 Mon 1:45 PM ET: Bostic on Bloomberg TV
– 3/24 Mon 3:10 PM ET: Barr Speaks on Small Business Lending
– 3/25 Tue 8:40 AM ET: Kugler Gives Speech on Economy, Entrepreneurship
– 3/25 Tue 9:05 AM ET: Williams Gives Opening Remarks
– 3/26 Wed 10:00 AM ET: Kashkari Hosts Fed Listens, conversation
– 3/26 Wed 1:10 PM ET: Musalem Speaks on Economy, Monetary Policy
– 3/27 Thu 4:30 PM ET: Barkin Gives Speech, Q&A – 3/28 Fri 12:15 PM ET: Barr Gives Speech on Banking Policy
– 3/28 Fri 3:30 PM ET: Bostic Moderates Panel on Housing Finance

Bottom Line: Stocks have room to run as easing trade fears and a supportive Fed restore confidence in equities.

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Key incoming data March:

~~3/3 9:45 AM ET: Feb F S&P Global Manufacturing PMI~~ Tame
~~3/3 10:00 AM ET: Feb ISM Manufacturing PMI~~ Tame
~~3/5 9:45 AM ET: Feb F S&P Global Services PMI~~ Tame
~~3/5 10:00 AM ET: Feb ISM Services PMI~~ Tame
~~3/5 10:00 AM ET: Jan F Durable Goods Orders~~ Tame
~~3/5 2:00 PM ET: Mar Fed Releases Beige Book~~ Tame
~~3/6 8:30 AM ET: 4Q F Non-Farm Productivity~~ Tame
~~3/6 8:30 AM ET: Jan Trade Balance~~ Tame
~~3/6 8:30 AM ET: 4Q F Unit Labor Costs~~ Tame
~~3/7 8:30 AM ET: Feb Non-Farm Payrolls~~ Tame
~~3/7 9:00 AM ET: Feb F Manheim Used Vehicle index~~ Tame
~~3/10 11:00 AM ET: Feb NY Fed 1yr Inf Exp~~ Tame
~~3/11 6:00 AM ET: Feb Small Business Optimism Survey~~ Tame
~~3/11 10:00 AM ET: Jan JOLTS Job Openings~~ Tame
~~3/12 8:30 AM ET: Feb CPI~~ Tame
~~3/13 8:30 AM ET: Feb PPI~~ Tame
~~3/14 10:00 AM ET: Mar P U. Mich. Sentiment and Inflation Expectation~~ Hot
~~3/17 8:30 AM ET: Feb Retail Sales Data~~ Tame
~~3/17 8:30 AM ET: Mar Empire Manufacturing Survey~~ Tame
~~3/17 10:00 AM ET: Mar NAHB Housing Market Index~~ Tame
~~3/19 9:00 AM ET: Mar M Manheim Used Vehicle index~~ Tame
~~3/19 2:00 PM ET: Mar FOMC Decision~~ Dovish
~~3/19 4:00 PM ET: Jan Net TIC Flows~~ Tame
~~3/20 8:30 AM ET: Mar Philly Fed Business Outlook~~ Tame
~~3/20 10:00 AM ET: Feb Existing Home Sales~~ Tame
3/24 8:30 AM ET: Feb Chicago Fed Nat Activity Index
3/24 9:45 AM ET: Mar P S&P Global Manufacturing PMI
3/24 9:45 AM ET: Mar P S&P Global Services PMI
3/25 9:00 AM ET: Jan S&P CoreLogic CS home price
3/25 10:00 AM ET: Mar Conference Board Consumer Confidence
3/25 10:00 AM ET: Feb New Home Sales
3/26 10:00 AM ET: Feb p Durable Goods Orders
3/27 8:30 AM ET: 4Q T GDP
3/28 8:30 AM ET: Feb PCE Deflator
3/28 10:00 AM ET: Mar F U. Mich. Sentiment and Inflation Expectation
3/31 10:30 AM ET: Mar Dallas Fed Manuf. Activity Survey

Economic Data Performance Tracker 2025:

Economic Data Performance Tracker 2024:

Economic Data Performance Tracker 2023:

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