Here's the Deal - March 16, 2025

Economy: In Slowdown

Market Cycle: Under Pressure

_{Week 11 of 52 for 2025: 21.12% of the way through 2025}

Table of Contents

• Weekly Note:

• Egg-cellent News

• Major shake-up in the Real Estate sector.

• JOLTS were uneventful.

• This Week in Tariff Talk

• No Government Shutdown

• Inflation buckles.

• It’s Fed Week

• Another sign of Slowdowns and Recessions just popp …

• Business Owners and Executives are Warning about t …

• Markets:

• Significant Economic Data from the previous week:

• Economic Data to watch this week:

• Earnings this Week:

• WTF of the Week:

• Quote of the Week:

Weekly Note:

Another tough week in the markets, as volatility continued to move higher, with the VIX closing the week above the major $20 level after nearly hitting $30 on Tuesday amid the Trump-Ford tariff standoff. As the chaotic tariff “negotiations” kept fueling market and economic turmoil.

But we did get some good news this week on a few different fronts, and markets ended the week about as good as one could’ve hoped.

A major acquisition in the real estate sector was announced this week.

And the government shutdown was averted. Yayyy.

It’s also Fed Week once again, but best not to expect another round of rate cuts just yet.

Egg-cellent News

One of the best pieces of news this week is that egg prices have come crashing down. Great news as it looks like you will not need a payment plan just to afford them for Easter.

Major shake-up in the Real Estate sector.

A major shake-up in the real estate sector this week as Rocket acquired Redfin. This move positions Rocket to reclaim its title as the number one mortgage provider in the U.S. from UWM.

While Rocket has long dominated the refinance market, this strategic acquisition gives them a stronger foothold in home purchase loans. With Redfin’s platform now in their arsenal, they’re likely to regain the top spot in the mortgage industry.

JOLTS were uneventful.

This week’s JOLTS report didn’t bring much excitement. The number of job openings came in just slightly above expectations, while last month’s figure was revised down a little bit. Overall, job openings remain at the same level as their pre-pandemic peak for now.

This Week in Tariff Talk

Keeping up with the chaos, contradictions, and outright nonsense of the tarriff narrative in real time became even more difficult this week. Even for those watching and tracking it closely.

Even from a more right-leaning perspective, some of the claims being thrown around were so blatantly false they must to be called out.

Take Press Secretary Leavitt’s statement that tariffs are a tax on foreign countries. That’s simply not true. Tariffs are paid by the importer, who then passes the cost to businesses buying the goods. Those businesses, in turn, raise prices for their customers. The end result? The cost lands squarely on you and me, the consumers. At no point does the exporting country make a payment to the US.

But even that bit of economic nonsense was nothing compared to the ridiculous back-and-forth between President Trump and Ontario Premier Doug Ford earlier in the week.

It turned into a pointless power struggle. As Ford announced he would retaliate to new tariffs by cutting energy exports to the US, which would have affected Minnesota, Michigan, and New York.

Trump fired back saying he would increase tariffs an additional 25% on Canada. The rhetoric from both spiraled into a childish back and forth.

In the end, it was nothing more than a game of “Who has the bigger dick?” But sadly neither of them is showing any real courage as they’re playing with other people’s money and livelihoods and not their own.

After all the posturing, they finally took a breath. Then just shrugged about it the next day and basically said, “Yeah, never mind. No changes for now.”

Truthfully, it was a petty and sad display by both.

Ultimately, the only real changes this week were:

• Steel and aluminum tariffs took effect

• EU announced tariffs on $28B worth of US goods.

• Trump then threatened the EU with additional tariffs

• Canada announced retaliatory tariffs on $21B worth of US goods.

No Government Shutdown

Some good news from Washington this week as a government shutdown was avoided. House Republicans came together to pass the funding bill, which then cleared the Senate without a filibuster from Schumer. This keeps the government funded until September… when we get to go through this whole process all over again.

Inflation buckles.

This week brought a promising development as Core CPI, CPI, Core PPI, and all came in below estimates while PPI came in as expected. More importantly, all came in lower than last month’s rates. This could be a sign that inflation is finally losing its grip.

The only downside to the reports was January’s Core PPI and PPI rates were revised higher than initially reported last month.

But before getting too excited, it's worth noting that the impact of new tariffs hasn’t fully hit yet, as most weren’t in effect during February. That means the real test is still ahead. The big question: Can consumers continue shouldering the burden, or will businesses take the hit in their profit margins? If margins shrink too much, we’re likely to see layoffs start rolling in.

So while inflation might be cooling, the next concern is corporate earnings. If companies are already struggling to pass higher costs onto consumers, then expect unemployment to start creeping higher in the months ahead.

It’s Fed Week

Which sets up this week’s Fed announcement on interest rates.

Best not to expect a cut yet as the Fed still needs to see more improvement on the inflation front before it can responsibly cut rates again.

As the odds are currently at 98% that the Fed leaves rates unchanged this week.

However, recent deterioration in the markets and now obvious signs that the US economy is in a Slowdown has increased the odds of a rate cut in June to over 75%… for now.

Another sign of Slowdowns and Recessions just popped up.

WSJ reported that Law School applications have soared this year. This is relevant as enrollment typically increases substantially during Economic Slowdowns and Recessions as finding new work gets more difficult.

Another sign of the current Economic Slowdown which The Economy Tracker saw coming last year.

Business Owners and Executives are Warning about the Economy

Warnings from business owners and executives grew louder this week, including from some of President Trump’s strongest supporters. The back-and-forth on tariffs has created so much uncertainty that many say planning has become nearly impossible.

And when businesses can’t plan, they stop investing. When investments dry up, less money circulates through the economy. That leads to lower consumer spending, which reduces the need for workers. Fewer workers mean more job cuts. Then before you know it, the economy slides into a worsening recession.

Probably why JPMorgan Chase CEO Jamie Dimon said this week: “I am seeing some weakening in the US economy and negative sentiment… tariffs are causing uncertainty.”

The good news? We’re only at the early stages of this cycle. So it could be reversed with better policy an decision making.

The bad news? Right now, there’s no clear end in sight.

Markets:

Markets had another volatile week, kicked off by a classic bear trap set the previous Friday. That move sent the VIX soaring to its highest level since the Yen Carry Trade turmoil back in August.

Selling pressure only intensified as the Trump-Ford standoff and additional tariff uncertainty rattled investors. The result? The S&P 500 joined the Russell 2000 and the Nasdaq in an official correction as it experienced a daily close of 10% lower than its high. A move that, if you’ve been following along, was outlined in the 2025 Forecast as a likely scenario in the first three months of the year.

The good news it that Friday saw a strong gap up which, unlike the last few weeks, held all day as three out of the four major indices gained over 2%, while the Dow Jones closed up over 1.5%.

Now that the indices have all put in lower lows on the weekly charts and most officially hit correction territory, it’s time to reassess and update the charts with the likely paths ahead in the coming months.

That will have to come in another post as this one is already long enough. But for now, here’s some updated charts for the indices.

$SPY ( ▲ 0.63% ) S&P 500

If the short-term bottom is in, look for a move to $587 -$593.

$DIA ( ▲ 0.58% ) Dow Jones Industrial Average

If short-term bottom is in, look for a move to $428.50 - $434.

$QQQ ( ▲ 0.73% ) Nasdaq

If short-term bottom is in, look for a move to $503 - $513.

$IWM ( ▲ 1.58% ) Russell 2000 (Small Caps)

Death Cross imminent as the 50day will break below the 200day this week.

For now though, I’d expect at least a bounce from markets. Whether the longer term bottom is in remains to be seen.

First things first though, as it’s imperative for SPY, DIA, and QQQ to get back above their 200day averages (green moving average line on the charts.)

For longer term readers, the ever increasing volatility is no surprise as it was correctly predicted here last Summer as The Economy Tracker signaled the economy was heading into its current Slowdown.

So while Wall St. is once again late in informing you of what happened after the fact, The Economy Tracker told you what was going to happen before most even knew to pay attention.

That my friends is called “an edge.”

YTD, defensive sectors continue to show relative strength over economic growth sectors.

But if markets perform as bad in the next few weeks as they did the last few weeks, then it’s likely that the recession is much closer than previously thought.

If that’s the case, then all bets are off.

Hopefully it’s not the case.

Significant Economic Data from the previous week:

Economic Data to watch this week:

Earnings this Week:

WTF of the Week:

Quote of the Week:

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