If uncertainty around tariffs and the unpredictability of US President Donald Trump’s administration persists, we will see weaker corporate investment, a looser labour market and potentially higher savings rates from nervous households.
Downward pressure will only intensify from tariff-driven demand and supply shocks. Somewhat predictably, the ‘Wall Street meets Tech Bros' constructed narrative around Trump being good for business has faded, though their palpable fear of the president has increased. Whether or not the market is adequately pricing in the potential demand and supply shock from tariffs and potentially tighter immigration policies remains to be seen. Even if economic growth comes under pressure, high inflation may limit the Federal Reserve's ability to respond. Recession fears recede but still higher ...
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