THE TRUMP ADMINISTRATION
It doesn’t matter whether you find the Trump administration’s frenzied base to be either infuriating or invigorating. One thing’s for certain — it isn’t boring.
THE ALLY ASSESSMENT
Trump administration officials have been brutally honest in their assessment of U.S. allies — much to the latter’s extreme displeasure. Interestingly, this public candor seems to have produced more results in a shorter period than have decades of “behind closed doors” diplomacy ever did.
THE THREAT OF TARIFFS
Everyone knows the markets don’t like uncertainty. They really don’t like the uncertainty of what tariffs could mean for an increasingly exhausted U.S. consumer.
AN UNEXPECTED PATH TO POWER
During the 1st quarter of 2025, Americans found out you don’t have to be an elected official to be prime minister of Canada. The new prime minister, Mark Carney, had never held an elected office prior to holding the highest political position in the country. Who knew this was even possible?
THE DOGE DISCOVERIES
The quickest way to get peoples’ attention? Turn off the federal funding spigot. Elon Musk’s Department of Government Efficiency (DOGE) did just that in the 1st quarter, quickly uncovering a surprising amount of, shall we say, curious spending in Washington in a very short period.
WILDFIRE WOES
Naturally occurring wildfires can get deadly and be very expensive when people live “cheek by jowl” in extremely arid, windy areas. Things can get even uglier when humans are to blame for the fires.
CONSUMER SENTIMENT: MOOD VS METRICS
What Americans are saying about the economy and what they are doing seem to be two different things. Consumer confidence has fallen dramatically since the end of October. However, the actual economic data has been surprisingly resilient, decent even. At some point, something will have to give.
THE TECH STOCK TURNOVER
If you owned a lot of technology stocks in your investment portfolio, you absolutely loved 2023 and 2024. However, the 1st quarter of 2025 was a sharp reminder that whatever goes up must come down.
INTERNATIONAL STOCK RALLY
International stocks had a terrific quarter, especially European ones. However, it is far from certain whether investors actually like Europe or whether they were simply rebalancing their portfolios after years of outsized returns in the U.S.
GOLD IS ON A ROLL
For a number of reasons, central banks around the world have significantly added to their gold positions over the past several years. Retail investors finally took notice and have been gobbling up gold funds and bullion in response. As a result, the price of gold has soared to all-time highs. Not bad for a shiny hunk of metal that doesn’t pay interest or a dividend and doesn’t generate any revenue.
THE FEDERAL RESERVE HITS PAUSE
The Federal Reserve seems to be as confused as everyone else when it comes to both inflation and the labor markets. Comments from Fed officials make it pretty apparent they are increasingly content letting conditions “play out” a little before making any major changes to monetary policy. That is probably a good thing.
THE COST OF CUTTING BACK
The DOGE’s spending and job cuts will have a negative short-term impact on the economy — there is no way around it. Most people can appreciate the necessity of getting Federal spending under control, but no one’s happy when it’s their job, contract or budget on the chopping block.
THE FED’S (NO-SO) SUBTLE SWAY
While the Federal Reserve doesn’t officially set long-term interest rates, it will significantly influence them moving forward by manipulating the size of its balance sheet. It has already done so in 2025 by effectively ending its “quantitative tightening” program.
This content is part of our quarterly outlook and overview. For more of our view on this quarter’s economic overview, inflation, bonds, equities and allocations, read the latest issue of Macro & Market Perspectives.
The opinions expressed within this report are those of the Investment Committee as of the date published. They are subject to change without notice, and do not necessarily reflect the views of Oakworth Capital Bank, its directors, shareholders or associates.