In today’s briefing:
- US Corporate Profits Expectations Remain Resolute Despite Tariff Uncertainties
- A Preview of the Trump Fed
- How to Capitalize on Narrative Volatility
US Corporate Profits Expectations Remain Resolute Despite Tariff Uncertainties
- US equities have displayed remarkable resilience since the announcement of reciprocal tariffs, notably without any promise of immediate help from the Fed via policy easing.
- Although expected S&P500 EPS growth has been lowered for 2025, estimates for 2026 remain resolute, despite ongoing uncertainty about final tariff outcomes. Maintaining respectable productivity growth will be crucial.
- The arrival of tariffs complicates the future business strategies of firms due to varying degrees of market competition and the unknown response of consumers to price increases.
A Preview of the Trump Fed
- The Fed remains on hold and in wait-and-see mode as it assesses the inflationary tariffs against the backdrop of a weakening labour market.
- The market is discounting two quarter-point rate cuts in 2025 and a rapid pace of cuts in 2026.
- Future Fed policy will depend on how the market perceives the new Fed Chair’s affects the Fed’s inflation fighting credibility.
How to Capitalize on Narrative Volatility
- The current market environment is characterized by high market volatility, which has manifested itself as narrative volatility.
- We offer four ways to capitalize on the short-term volatility for traders.
- The suggested trades are the combination of identifiable underlying trends and technical breaks as signals for short-term profit.
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