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Yahoo
02-06-2025
- Business
- Yahoo
Why the Market's Long-Term Outlook is Bullish
Despite the recent flurry of tariff news and economic uncertainty portrayed by pundits, several key indicators are flashing bullish signals, including: The 'GDPNow Model' is a model created by the Federal Reserve Bank of Atlanta to provide a real-time estimate of the current quarter's Gross Domestic Product (GDP) growth. Through its 'Nowcasting' model, the GDPNow Model leverages a purely data-driven model that interprets current data to predict the future instead of simply predicting future economic conditions. Between the first negative GDP reading in several quarters, an escalating trade war, and negative sentiment, the GDP picture looked quite bleak. However, the current market environment illustrates why savvy investors rely on data-driven predictive models to eliminate bias and find the hard truth. In the latest reading, the GDPNow Model for real GDP growth (seasonally adjusted annual rate) in Q2 2025 is a robust 3.8%, up from 2.2% in the last reading. Image Source: Federal Reserve Bank of Atlanta The PCE Price Index (Personal Consumption Expenditures) number was released Friday. The reading came in at a 2.1% gain year-over-yea,r which was softer than Wall Street expected. The key inflation rate hit a 4-year low. Image Source: FRED Meanwhile, 'Supercore PCE,' which measures the price of 'core services,' saw its first negative reading since COVID. The latest inflation reading shows that President Trump's tariff policy has not negatively impacted prices (at least yet.) With PCE near the Fed's 2% target, investors should expect rate cuts in 2025 – a bullish development for stocks. Bull markets are driven by high-growth industries, and currently, the industry with the most innovation and the highest growth potential is the artificial intelligence (AI) space. Within the AI industry, Nvidia (NVDA), thesemiconductor leader, is the most important stock. In fact, without Nvidia's GPUs, it's impossible to be an AI leader. The company's earnings report in late May showed that there is plenty of room for the industry left to grow. Revenue bolted 69% year-over-year to $44 billion despite a $4.45 billion charge attributed to H20 product export restrictions to China. Despite the uncertainty in the macro trade environment, Zacks Consensus Analyst Estimates suggest that top and bottom-line growth will continue to grow at a healthy clip in the mid-double-digits. Image Source: Zacks Investment Research Meanwhile, other AI industry leaders echo Nvidia's significant growth. For instance, fellow AI leader and recent IPO CoreWeave (CRWV) reported Q1 revenue of $982 million, a fourfold year-over-year increase. Meanwhile, the Amazon (AMZN) AWS Chief reported Friday that AI cloud sales have reached multiple billions. Bitcoin and bitcoin proxies like iShares Bitcoin ETF (IBIT) have been valuable tools for investors to leverage as a leading indicator. For instance, IBIT topped on December 17th, 2024, well before the S&P 500 Index topped in February 2025. Now, IBIT is breaking out to new highs well before the major US equity indices. Could they follow next? Image Source: Zacks Investment Research Meanwhile, other risk-on areas of the market are showing that the 'animal spirits' are alive and well. For example, quantum computing leader D-Wave Quantum (QBTS) is up nearly 70% year-to-date. Image Source: Zacks Investment Research The general market exhibits a massive change of character over just the past month or two. For instance, Friday, President Trump said on social media that 'China's has totally violated its agreement with the US.' Earlier in the year, stocks would have plunged on this news. However, this time, the market opened lower by around 1%, only to quickly find buyers and finish the session green. Brushing off bad news is a hallmark of a bull market and is a subtle clue for savvy investors that the market is resilient. Now, the S&P 500 is setting up a picture-perfect daily bull flag pattern. Image Source: TradingView Bottom Line The confluence of strong economic indicators, the AI revolution, and the market's resilient behavior point to a market where bulls are in control. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Inc. (AMZN) : Free Stock Analysis Report NVIDIA Corporation (NVDA) : Free Stock Analysis Report D-Wave Quantum Inc. (QBTS) : Free Stock Analysis Report CoreWeave Inc. (CRWV) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Epoch Times
06-05-2025
- Business
- Epoch Times
US Trade Deficit Hits Record in March on Pre-Tariff Imports Spike
The U.S. trade deficit widened to a record high in March as companies accelerated their imports ahead of U.S. tariffs taking effect. Bureau of Economic Analysis The monthly international trade deficit includes goods and services. Market watchers had anticipated a trade shortfall of $137 billion. Imports increased by 4.4 percent to a record high of $419 billion as businesses bolstered their purchases from abroad before the government made further tariff announcements. Companies purchased a greater amount of pharmaceutical preparations, finished metal shapes, passenger cars, and computer accessories. Related Stories 5/6/2025 5/5/2025 Exports rose at a tepid pace of 0.2 percent but hit a record $278.5 billion in March. U.S. companies shipped more industrial supplies and materials, passenger cars, and computer accessories. America's trade deficit with the European Union climbed to $48.3 billion from $30.9 billion, and its deficit with Ireland surged to $29.3 billion from $15.3 billion. The U.S. trade deficit with China narrowed to $24.8 billion from $26.6 billion. The gap also diminished with Switzerland, from $18.8 billion to $14.7 billion. America's trade deficit with Canada eased to $4.9 billion from $7.4 billion. The Census Bureau So far this year, the trade deficit has dragged down economic growth. In the first quarter, the U.S. economy contracted by 0.3 percent, fueled primarily by a 41 percent spike in imports. The Bureau of Economic Analysis subtracts imports from the gross domestic product (GDP) because the United States is purchasing more goods and services from foreign markets than domestically produced alternatives. The previous quarter's decrease may have been a one-off. The Federal Reserve Bank of Atlanta's GDPNow Model estimate suggests a 1.1 percent expansion in the second quarter, fueled by an expected improvement in the trade deficit. President Donald Trump and senior administration officials have repeatedly criticized the trade imbalance. 'Our trade deficit, driven by these nonreciprocal conditions, is a manifestation of the loss of the nation's ability to make, to grow, to build, and the president recognizes the urgency of the moment,' U.S. Trade Representative Jamieson Greer said in a Senate Finance Committee 'Our large and persistent trade deficit has been over 30 years in the making, and it will not be resolved overnight, but all of this is in the right direction.' Others have pushed back against the White House's trade deficit concerns. Then-U.S. Trade Representative nominee Jamieson Greer testifies before the Senate Committee on Finance on Capitol Hill in Washington on Feb. 6, 2025. Madalina Vasiliu/The Epoch Times Minneapolis Federal Reserve President Neel Kashkari says a trade deficit signals investor confidence in the United States. 'It's just economic math that if investors around the world say one country is the best place to invest, the math works out that that country will have a trade deficit,' Kashkari said in an April 13 A 2018 Congressional Research Service 'Attempting to alter the trade deficit without addressing the underlying macroeconomic issues will likely be counterproductive and create distortions in the economy,' the report stated. Volatility in Trade Dynamics Export bookings to the United States have remained resilient despite week-to-week volatility, according to However, U.S. exports to China have plummeted, collapsing by approximately 80 percent by the end of last month, 'pointing to deep disruptions tied to sourcing shifts, policy retaliation, or softening U.S. demand,' the firm said in a report. 'Tariff adjustments in March and April may have prompted cautious booking behavior or encouraged front-loading ahead of new policies. Meanwhile, shifting demand from key global markets is influencing volumes.' In a first-quarter earnings 'We expect container volume and average rates in the second quarter to be lower year over year,' Matson CEO Matt Cox said in a call with shareholders and analysts. 'At the moment, it's difficult to know if these lower volume levels are transitory or will persist for a longer time in 2025, and the duration of this lower demand period will likely depend on active negotiations taking place across the supply chain, and the timing of potential amendments to the tariffs.' Conditions could stabilize now that the 'tariff shock has passed,' says Jay Woods, chief global strategist at Freedom Capital Markets. 'We got the worst of the tariff news and are starting to 'negotiate' and scale things back,' Woods said in an email to The Epoch Times. In an 'I think we're very close to some deals,' Bessent said, adding that announcements could occur this week. Trump recently added to his tariff plans by proposing on Truth Social a 100 percent tariff on movies produced outside the United States, saying, 'We want movies made in America, again!' He later clarified to reporters on May 5 that he would meet with America's film industry to 'make sure they're happy' with his concept.
Epoch Times
30-04-2025
- Business
- Epoch Times
US Economy Contracts in 1st Quarter for First Time Since 2022
The U.S. economy contracted to kick off 2025 as a spike in imports weighed on the country's growth prospects. According to the This was the first quarterly contraction since the first quarter of 2022, but it was better than some forecasts signaled. The widely watched Atlanta Federal Reserve Bank's GDPNow Model Imports, which are subtracted from the gross domestic product calculations, rocketed 41.3 percent in the first three months of the year as businesses were front-running President Donald Trump's tariffs. GDP data indicate that the decline was also a reflection of a decrease in government spending. In the January–March period, government outlays fell by 1.4 percent, with federal spending plummeting by 5.1 percent. Related Stories 4/28/2025 4/22/2025
Epoch Times
29-04-2025
- Business
- Epoch Times
First-Quarter GDP Preview: What to Expect for Economic Growth
The Bureau of Economic Analysis will release its first-quarter GDP report on April 30. The Federal Reserve Bank of Atlanta's GDPNow Model , a widely watched estimate, suggests the growth rate was negative 0.4 percent after adjusting for gold imports and exports. If accurate, this would represent a decline from the previous quarter's 2.4 percent The U.S. economy is expected to have endured a sharp slowdown in the first quarter, in light of tariff shocks and policy uncertainty, economists say. Imports likely played an outsized role in the GDP report as companies rushed to purchase items overseas before President Donald Trump's tariffs were implemented. In the GDP calculations, imports are subtracted from U.S. growth because they account for spending on goods and services made abroad rather than in the United States. Related Stories 4/28/2025 4/22/2025 Market watchers have been observing whether deteriorating business and consumer sentiment would appear in the hard data, and some estimates reflect a modest pullback in the broader economic landscape. One area economic observers have paid close attention to is consumer spending, which accounts for about two-thirds of the economy. Recent Commerce Department Conversely, retail sales Various purchasing managers' indexes (PMIs)—monthly surveys of sectors' prevailing economic direction—have highlighted slowing output, anemic demand, and higher cost pressures for businesses. Before on-again, off-again tariffs spooked the financial markets, experts had also determined that frigid winter weather and wildfires in Los Angeles would likely affect the data. 'Much of the weakness in consumption in January is related to one-off factors, including the effects of the coldest January since 1988, which weighed on autos spending and a range of spending on recreation goods and services,' said Michael Pearce, the deputy chief U.S. economist at Oxford Economics, in a note. 'The wildfires in Los Angeles were likely a drag in January, along with a hangover from the solid holiday shopping season. A sharp January to March slowdown could be a one-off, as consumers have signaled they are feeling slightly better about current economic conditions. According to the University of Michigan's final April Consumer Sentiment Index, the current conditions sub-index rose from the preliminary estimate. However, it remains at the lowest level in nearly three years. Looking ahead, economists have trimmed their U.S. GDP forecasts for the rest of the year. Satyam Panday, S&P Global's chief economist for the United States and Canada, forecasts real GDP growth will cool to 1.55 percent this year—down from 2.8 percent in 2024—before 'picking up after a slow start' in 2026. 'This is because we see uncertainty related to the structure of tariffs abating, the Federal Reserve further easing its policy rate, and partly due to a more favorable growth backdrop in the eurozone that will support expanding U.S. exports,' Panday said in a note. Jan Hatzius, the chief economist at Goldman Sachs, thinks the president could diminish turbulence by scaling back some of his tariff plans. 'I don't disagree that the uncertainty effect could inflict ongoing damage to the economy. But I do think a pullback on tariff policy would nevertheless help stabilize conditions in the near term,' he said in a report. Other Data to Watch First-quarter GDP will not be the only major economic reading this week. On the labor front, the April jobs report will be published on May 2. The U.S. economy is expected to have created 135,000 new jobs and register an unemployment rate of 4.2 percent. A "now hiring" sign is seen at a mall in Hanover, Md., on Nov. 29, 2024. Madalina Vasiliu/The Epoch Times Last week, initial and continued jobless claims remained near their two-month lows, reflecting a persistently tight labor market. 'Recession risks are seen as elevated,' Mark Hamrick, senior economic analyst at Bankrate, said in a statement to The Epoch Times. 'But the job market has remained resilient, with the unemployment rate recently in the low 4% range. That is expected to continue with the April reading remaining at or close to 4.2%, as seen in March.' Economists and policymakers will also digest inflation numbers. The Fed's preferred inflation measure, the March personal consumption expenditure (PCE) price index, is expected to have slowed sharply to 2.2 percent from 2.5 percent. Core PCE, which removes the volatile energy and food components, is also anticipated to have eased to 2.5 percent. 'This week's data docket is likely to paint the picture of slowing growth ahead of the Trump Administration's tariff shock and declining consumer and business sentiment in the wake of the announcements,' Deutsche Bank economists said in an April 25 note. However, Bill Adams, the chief economist for Comerica Bank, predicts that the United States will avert a recession this year. 'Comerica's April forecast assumes that there is a substantial reduction in effective tariff rates and more certainty about economic policy relatively soon, which causes the flow of goods through the economy to normalize,' Adams said in a note emailed to The Epoch Times. 'That would allow the economy to dodge a recession in 2025, although growth is still forecast to slow from 2024's pace.' What will all this mean for the Federal Reserve? Caution Ahead at the Fed Investors overwhelmingly expect the Fed to leave interest rates unchanged in a range of 4.25 percent and 4.5 percent at next month's policy meeting. According to the CME FedWatch Tool, the futures market sees a 58 percent chance of a June rate cut, down from 65 percent a month ago. A chorus of U.S. central bank officials says that the effects of the current administration's policy changes may not be felt until later in the year. As a result, the Fed could hold rates steady for longer than expected. In an April 25 interview with Bloomberg Television, Fed Gov. Christopher Waller said he would support rate cuts if unemployment substantially increased. 'It wouldn't surprise me that you might start seeing more layoffs, a tick up in the unemployment rate going forward if the big tariffs in particular come back on,' Waller said. 'I would expect more rate cuts, and sooner, once I started seeing some serious deterioration in the labor market.' Appearing at an event hosted by the Economic Club of Chicago earlier this month, Fed Chair Jerome Powell acknowledged that monetary policymakers can be patient as they 'wait for greater clarity.' In prepared remarks, Powell stated that the administration's fiscal, immigration, regulatory, and trade policy could present a 'challenging scenario' for the Federal Reserve should inflation and unemployment rise simultaneously. Federal Reserve Chair Jerome Powell speaks with Raghuram Rajan, a professor of finance at the University of Chicago's Booth School, during an Economic Club of Chicago event in Chicago on April 16, 2025.'If that were to occur, we would consider how far the economy is from each goal, and the potentially different time horizons over which those respective gaps would be anticipated to close,' Powell said. While he thinks tariffs could trigger a short-lived increase in inflation, the inflationary effects could 'also be more persistent.' 'Avoiding that outcome will depend on the size of the effects, on how long it takes for them to pass through fully to prices, and, ultimately, on keeping longer-term inflation expectations well anchored,' Powell added. He refrained from presenting a time frame for when the Fed could restart its rate-cutting cycle. This month, Trump increased his pressure on Powell to lower interest rates as quickly as possible, saying it's the perfect timing to do so when energy and food costs are trending down and 'there is virtually No Inflation.' In an April 21 Truth Social While Trump has expressed his frustration with Powell's approach, he
