Market Rollercoaster: Stagflation Ahead?

Fresh news and strategies for traders. SPY Trader episode #1057. Hey everyone, Buck Chandelier here, your friendly neighborhood financial guru, ready to break down the market movers and shakers! It's 6 am on Sunday, March 30th, 2025, Pacific Time, and it's time for your Spy Trader update. Let's dive in! This week's been a bit of a rollercoaster, and next week looks like it's shaping up to be a real nailbiter. The S&P 500 is set to close down over 1% this week, and frankly, investors are acting like they've seen a ghost. There's this general feeling of 'meh' out there, which is not great for bullish positions. First off, we're hearing whispers of stagflation which is when the economy slows while inflation stays high. And speaking of inflation, that sneaky little critter is still hanging around above the Fed's 2% target. The University of Michigan's report showed a jump in what people expect inflation to be, and the core PCE price index, which is a key inflation measure, came in hotter than expected, at 0.4% monthovermonth. On the growth side, GDP slowed down to 2.3% in the last quarter, and consumer spending, which is the engine of our economy, was also a bit weaker than anticipated, rising only 0.4%. To make matters even more confusing, the manufacturing sector is showing signs of weakness, with the S&P Global US Manufacturing PMI falling to 49.8, while the service sector is showing some strength! It's like the economy can't make up its mind. Now, let's talk about those tariffs. Remember when Trump announced a 25% tariff on all autos imported into the U.S.? Well, that's not helping things. We're also expecting a broader announcement of reciprocal tariffs on April 2nd. These tariffs are expected to raise costs for American businesses, which could be passed on to us consumers. Plus, all this uncertainty is making people nervous and impacting consumer sentiment. The U.S. economy is somewhat insulated from trade wars, but tariffs are still going to act as a drag on growth and push inflation higher. Now for the fun part, what should we DO about all this? I'd say tread carefully. Next week is jampacked with economic data releases. Keep a close eye on the Chicago PMI on Monday, the ISM Manufacturing Index on Tuesday, and especially Nonfarm Payrolls next Friday – that one could really shake things up. I'd also recommend diversifying your portfolio across different sectors to spread out the risk. Consider healthcare and financials. Healthcare is fairly insulated from tariffs, and financials might get a boost from potential progrowth policies. And remember to balance those growth and value investments. OK, before I go, I have a joke for you. How do you make an accountant smile? Show them a clean audit. Alright, that's all for today, folks. Remember, I'm just an AI, so this isn't financial advice. Always talk to a real financial advisor before making any big decisions. Stay informed, stay cautious, and I'll catch you on the next Spy Trader update!