My dad has been teaching me about investing since I was a teenager. Once of his all-time favorite mantras is “some days are better than others.” That phrase has been playing on repeat in my mind for the past two weeks as markets have taken investors on a wild (and painful) roller coaster ride.

That ride continued this week as a flurry of additional economic data and presidential actions came to the forefront. Let’s review a few of those key events

Jobs Report

February’s nonfarm payrolls report of 151,000 new jobs was slightly below expectations of 160,000. The report did not have any shocking elements or dramatic declines but it did provide evidence that the labor market is slowly building slack and facing potential downside risks moving forward. Activity is cooling and momentum of future hiring has come to halt – especially with the upcoming impacts of the Department of Government Efficiency’s changes.

Inflation Reports

February inflation reports were published this week and given everything else moving in markets, they went relatively unnoticed. The refreshing part? Both showed progress on inflation. The Consumer Price Index (focused on prices consumers pay) came in at 0.23% monthly increase, which was better than the expected 0.29% and down from January’s print of 0.45%. Shelter declines were a major contributor as was recreation spending (including airfares – see below). Below chart shows all the moves in consumer prices for the month

The Producer Price Index (measuring wholesale prices) also showed progress on inflation. It came in as unchanged for the month, versus an expectation of 0.3%.

All in all, the inflation prints were encouraging news but it remains unclear if they will be sufficient reason for the Fed to cut rates at their next meeting given all the other dynamics at play.

Declining Confidence

Investors are a fickle bunch and tend to feel great when markets are at all time highs – and awful when markets pull back. This is bearing out in the data this week as the AAII Investor Sentiment Survey showed an increase in % bearish (ie: negative views towards the market) at 59.2% (which is the sixth highest reading on record) and well ahead of historical average of 31% bearish

Company Forecasts

This week marked the first major instances of companies indicating that the political uncertainty may be impacting consumer and business behavior. A major announcement came from Delta Airlines, as the company cut its guidance noting a softening in US consumer demand in early 2025. A few other airlines and retailers followed suit later in the week. As discussed above, sentiment has shifted drastically and when confidence (and the wealth effect) declines, consumers and businesses sit on their hands – and slow/stop spending.

Trump Put Kaput?

There was a strong belief – based on past behavior and commentary – that President Trump was concerned with stock market performance. This became known as the “Trump Put” – meaning that there was a safety net for the markets as Trump would step in and offset any pullback.

As recently as early February, Trump seemed to be paying attention to markets

“I was very proud to have handed over the country when the stock market was higher than it was, previous to the pandemic coming in,” he said in a recent interview and “The stock market is going to be great,” he stated at a mid February investor conference.

However, since the market decline began, Trump has seemingly indicated that he’s not worried about market weakness. It seems the Trump Put may be kaput for now – but at some level of decline, policy makers (and presidents) pay attention. A poorly performing market and potential recession are not great backdrops for midterm elections after all..no one is immune to reacting to markets, not even politicians.

What Does this all Mean?

As I wrote about in another post this week, this correction is is many ways similar to prior ones – and also a bit different. It’s unnerving and uncomfortable, but if history is a reasonable guide, this too will pass.

While this uncertainty feels new, it’s always been there – and always will be there. Markets try to price in that uncertainty and while they are pretty good at it, they can overcorrect to the upside and the downside.

What’s working in investors’ favor? Growth and earnings changes remain positive (slowing but still at positive rates), political uncertainty may very well resolve for the better, valuations have adjusted for better, and negative sentiment tends to lead to positive forward returns. In addition, a key player remains on the sidelines but could act soon – that being the Federal Reserve. A main tool to spur consumption (which is a key driver of US economic growth) are interest rates. Lower rates drive more borrowing which drives more consumption and spending by consumers and businesses alike. Yes, the Federal Reserve wants to keep inflation under control but at some point, if growth stalls and the labor market cools, their hand may be forced.

I know this hasn’t been easy but in reality, investing never is. Try to moderate the content you are consuming and remind yourself how far you’ve come thanks to these very markets that are causing you this present day angst. The volatility we are experiencing in the price of admission for the long-run trendline that is decidedly “up and to the right.”

Onward we go,