Dear valued client,
Markets lost more ground this week as the U.S. economy added 151,000 jobs in February, slightly below the 160,000-170,000 anticipated by analysts and economists, but up from January’s figure of 125,000. The unemployment rate rose marginally to 4.1% from 4.0% the previous month, aligning with expectations of stability around that level.
Federal Reserve Chair Jerome Powell expressed confidence in the U.S. economy today, despite uncertainties stemming from the Trump administration’s rapid trade policy shifts, particularly on tariffs. Speaking at the University of Chicago, Powell noted that while businesses report challenges in planning due to this unpredictability, and consumer confidence dropped in February amid tariff-related inflation fears, the economy remains robust. He emphasized a cautious approach, stating the Fed is well-positioned to wait for clarity rather than rush into action. This stance comes as the economy shows signs of slowing—evidenced by declining consumer spending and housing activity—alongside persistent inflation, raising concerns about stagflation. Fed officials, including Powell and St. Louis Fed President Alberto Musalem, are monitoring data closely, prepared to adjust policy if inflation exceeds the 2% target or the labor market weakens, though rate cuts remain uncertain after a pause in January following three reductions in 2024.
Two days after imposing a 25% tariff on Mexican and Canadian goods, President Donald Trump reversed course, announcing a one-month pause on tariffs for imports under the USMCA trade agreement, which covers most goods between the U.S., Canada, and Mexico. This decision, which was clarified to include Canada after initial uncertainty, echoed a similar pause from February and excluded China, which faces ongoing retaliatory tariffs. While some view Trump’s tariff strategy as a negotiation tactic — supported by Commerce Secretary Howard Lutnick’s hints at resolution — market reactions have been volatile, with stocks dropping on Thursday despite an earlier rebound. Critics warn that this flip-flopping may strain U.S. alliances and economic stability.
In a significant shift from previous U.S. policy, the United States has initiated direct talks with Hamas amid faltering ceasefire negotiations. This development, reported as of March 6, 2025, does not indicate a softening stance, however, the U.S. is intent on bringing this conflict to a close as quickly as possible.
The end of possibly two wars would certainly be a boon to market conditions moving forward.
“The most dangerous negotiation is the one you don’t know you’re in.” – Christopher Voss
Have a great weekend,
PW
