Model switches to CASH/NEUTRAL.
The recent downturn in stocks is due in part to new US tariffs. President Donald Trump has announced new tariffs on imports from major trading partners like Canada, Mexico, and China. While only tariffs on China have been launched, these actions have sparked fears of escalating trade wars, which could negatively impact global trade, increase costs for businesses, and potentially lead to reduced consumer spending due to higher prices. The uncertainty around how future tariffs will affect the US and global economy have increased selling pressure on leading stocks and major averages.
Beyond tariffs, there's worry about inflation, interest rates, and the broader economic health. China and Japan have both reduced their levels of quantitative easing. The pace of global liquidity, in consequence, appears to be turning lower again though will be affected by the rate of inflation. Friday's University of Michigan’s measure of inflation expectations
jumped to 4.3% in February from 3.3% in the prior month. That’s highest level since November 2023, and it is only the fifth time in 14 years that there has been a one-month gain of that size. Wednesday's CPI and Thursday's PPI will be closely watched. We also had another rolling 20 days of 5 distribution days in the NASDAQ Composite.
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