Hello everyone,

Like sands through the hourglass, so are the days of our lives! Here we go! The S&P 500 index showed signs of recovery last week, increasing by 0.5% in its first weekly gain since mid-February. This surge was in direct response to the Federal Reserve's maintenance of unchanged interest rates, providing some stability and reassurance to investors. The committee outlined its expectations of two rate reductions in each of the next two years and one anticipated cut in 2027. The index concluded Friday's session at 5,667.56, reflecting a positive turn in the market sentiment.

Despite this recent uptick, however, the S&P 500 is still grappling with a 4.8% decline for the month of March and a 3.6% drop from its closing at the end of 2024. Investor concerns have primarily revolved around uncertainties in monetary policy and the looming impact of tariffs on inflation in the near future, both of which have contributed to the recent market downturn as we all have witnessed.

President Donald Trump weighed in on the Federal Reserve's decision, renewing his calls for rate cuts to stimulate economic growth amidst expectations of decreasing US tariffs. President Trump emphasized the importance of the Federal Reserve's action in aiding economic recovery and stability during these challenging times. Oh, the irony! Market uncertainty and challenging times have been closely tied to the policies and actions of the President Trump administration. President Trump's approach of unpredictability and strong rhetoric has contributed to the current state of affairs (https://ceritypartners.com/insights/trump-2-0-the-only-certain-thing-is-uncertainty/).

The administration's decisions, such as imposing tariffs on major trading partners like Canada, Mexico, and China, have led to increased uncertainty for businesses, consumers, and investors (https://www.reuters.com/markets/us/investors-flee-equities-trump-driven-uncertainty-sparks-economic-worry-2025-03-10/). Investors and businesses have been left guessing due to the administration's whipsawing moves, creating profound uncertainty and making the market 'untradable' at times (https://www.nytimes.com/2025/03/13/business/trump-stock-market.html). Yep!

President Trump's propensity for a strike-first-and-speak-loudly modus operandi has led to a scenario where uncertainty is expected to persist, with rapidly changing policies serving as a hallmark of his administration. While the environment may pose challenges, the current strength of the economy and profit growth have enabled the markets to navigate through the turbulence (https://ceritypartners.com/insights/trump-2-0-the-only-certain-thing-is-uncertainty/). Phew, thank goodness for some good news but for how much longer can markets support a stumbling economy?

Based on recent analyses and reports, there are growing concerns that the U.S. economy may be beginning to slow down. Various indicators suggest a potential downturn, including rising unemployment rates, declining GDP growth, and subdued consumer spending (NBC News - Recession Warning Signs & Trump Economy). The probability of a recession has been raised by experts and analysts, with some predicting a major recession looming on the horizon (The Financial Express - US Economy Headed for a Major Recession in 2025?). Although there are differing opinions on the extent of the slowdown and the likelihood of a recession, the consensus is that the U.S. economy is showing signs of deceleration.

How did we get here? While I don't like to point fingers, I think it's evident why. President Trumps policies are focused around bringing back manufacturing to the U.S. and improving government efficiency. To be honest, I think every nation should aspire to be better, but his path to get there has been a bit tacky. All that said, I think it's great that President Trump's Administration wants to bring back manufacturing…..or maybe not? Let's dissect this a little. Arguments for bringing back manufacturing to the U.S. can create employment opportunities for American workers, especially in regions that have been adversely impacted by the decline of manufacturing industries. It can also ensure higher quality control standards, increased product reliability, and adherence to stringent regulations and environmental standards. Although I don't think the President Trump administration is too worried about that… "Drill Baby Drill", LOL.

In doing so, this will contribute to economic growth, innovation, and technological advancements, boosting overall competitiveness in the global market. Lastly, one can also make the case that bringing back manufacturing can enhance national security by reducing dependence on foreign suppliers for critical goods and technologies. I think we are witnessing this in the AI race for dominancy, especially in the semiconductor space.

In the same breath, arguments can be made why the U.S. should not bring manufacturing back. The first (I believe, a no brainer) to consider is cost. Manufacturing goods in the U.S. may lead to higher production costs due to factors like labor wages, regulatory compliance, and operational expenses, which could potentially impact consumer prices. The hourly minimum wage in the U.S. is $7.25 (https://www.dol.gov/general/topic/wages/minimumwage#:~:text=The%20federal
%20minimum%20wage%20for,of%20the%20two%20minimum%20wages), compared to a country like Mexico which is only $1.85 USD  (https://start-ops.com.mx/minimum-wage-in-mexico/). I'm not sure making T-shirts or other apparel makes any sense to bring back, but they're not really talking about that. It's more related to bigger ticket items. All the same, whatever they build in America will be more expensive. The next crux would be related to global supply chains. Many industries rely on intricate global supply chains for components, specifically in the auto sector and raw materials, which may not be easily replicable or cost-effective to relocate entirely back to the U.S., like mining or oil/gas extraction. And finally, trade relations. Shifting production back to the U.S. could strain international trade relations and disrupt existing trade agreements, leading to retaliatory measures from other countries.

The United States' trade relations with other countries have experienced a noticeable decline, marked by tensions, disputes, and a shift towards protectionist policies. This deterioration in trade relations has significant implications for global commerce, diplomatic ties, and economic stability. It is unfolding in front of our eyes. Several factors contribute to this trend, reflecting a complex interplay of political, economic, and strategic considerations.

What is it going to take to ensure that stable global economics prevail? While I don't profess to be an Economist, Buddha, or the world's foremost leader in finance, I have done a lot reading and can reference my argument to what I think is needed. Global economic stability is going to require adherence to key standards and practices that promote sound financial systems and mitigate risks (Key Standards for Sound Financial Systems - Financial Stability Board - FSB). To achieve this, countries must prioritize maintaining financial stability, fostering international cooperation, and upholding regulatory frameworks that promote transparency and accountability (IMF - New Global Standards for Macroeconomic Statistics).

One critical aspect is the promotion of global financial stability through the implementation of standards that encourage good practices and resilience in financial systems (Financial Stability Board - Promoting Global Financial Stability). Additionally, the compilation of accurate and reliable macroeconomic statistics, such as external sector statistics, plays a crucial role in assessing economic interconnectedness and facilitating informed decision-making (OECD Economic Outlook, Interim Report March 2025).

Furthermore, understanding the forces reshaping the global economy, such as deglobalization and its impact on trade and capital flows, is essential for navigating economic challenges (State Street - Insights on Global Economic Forces). By addressing structural shifts and vulnerabilities, countries can better adapt to changing economic landscapes and promote stability.

To wrap it up and summarize all the said above: the recent market activity, influenced largely by the Federal Reserve's actions and trade policy uncertainties, has highlighted a shifting landscape. The S&P 500 showed signs of recovery, spurred by the Federal Reserve's decision to maintain interest rates, but still faces challenges with a decline throughout March and since the end of 2024. President Trump's policies and actions, marked by unpredictability and tariffs on major trading partners, have contributed to an environment of uncertainty. Concerns about a potential recession are emerging, with various indicators pointing to a potential slowdown in the U.S. economy. The Administration's focus on bringing manufacturing back presents both opportunities and challenges, with implications for economic growth, innovation, and national security. The deteriorating trade relations and rise of protectionist policies under the current administration have strained relations with key trading partners and triggered tariff disputes. To ensure global economic stability, adherence to key standards and practices, promotion of financial stability, fostering international cooperation, and understanding forces reshaping the global economy are crucial. Maybe I could have just made it short and just put out this paragraph, but you know me….I like to ramble and ramble……

I stand with Canada…….ELBOWS UP!