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This Week’s Market Recap… 📊

Coming into 2025, optimism was high with expectations of tax cuts and deregulation under the new Trump administration. However, within the first week, President Trump mentioned tariffs, sparking concerns.

Initially, markets shrugged off the tariff talk, hitting an all-time high on the S&P 500. Many assumed Trump was using tariffs as a negotiation tactic rather than a serious policy shift. But as tariff discussions persisted, uncertainty grew. Then, on February 20th, a sharply negative consumer sentiment report signaled that consumers feared inflation could reignite. This report marked the beginning of the 10% market correction.

Consumer sentiment is a “leading economic indicator,” forecasting future economic trends. It’s considered “soft data” since it’s based on surveys rather than hard figures like job reports or CPI. While consumer confidence usually provides valuable insight, today’s extreme political polarization skews its reliability.

The key concern in this report was future inflation expectations, which came in around 4%. The market reacted immediately, with stocks falling. Notably, survey responses varied dramatically by political affiliation—Republicans expected 0% inflation, while Democrats anticipated 7%. Since more respondents were Democrats, the survey was heavily skewed.

It’s ironic that a politically charged survey triggered the correction. Hard economic data has softened slightly but hasn’t shown drastic deterioration. While the economy may slow due to tariff uncertainty, I don’t expect market weakness or inflation spikes at the levels indicated by soft data. For now, we remain in a “wait and see” economy.

Have a wonderful weekend!!

Top ETFs on our Radar… 📈

The iShares Expanded Tech-Software Sector ETF has performed exceptionally well this year. Software companies have shown strong performance as investors seek to identify the next big winner in AI.

Tune in every Monday and Friday for in-depth Market Analysis, Recaps, and a featured Stock & ETF.

Thanks for reading and have a great week!

-Ryan

@Theinvestingauthority