# Control Panel: Trend changes? **URL:** \ **Category:** Macro Economic Trends and Risks\ **Created:** [January 26, 2025, 7:58pm UTC](https://discussion.fool.com/t/control-panel-trend-changes/112682 "2025-01-26T19:58:20Z")\ **Posts on this page:** 7\ **Page:** 1
**Author:** ![WendyBG](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/wendybg/32/67464_2.png) [@WendyBG](https://discussion.fool.com/u/WendyBG)\ **Post date:** [January 26, 2025, 7:58pm UTC](https://discussion.fool.com/t/control-panel-trend-changes/112682/1 "2025-01-26T19:58:20Z")
Every economically-conscious person in the U.S. is aware that Donald J. Trump, the new president, is keenly interested in economics. How will his new policies affect companies, asset markets and consumers? Of course, there are intentions…and then there are results. In the wise words of Yogi Berra, “It’s hard to predict, especially about the future.” But economists, investors and speculators can peer into the fog and try to predict cause and effect. [https://www.wsj.com/politics/policy/trump-economic-vision-policy-plan-e570b32b?mod=hp\_lead\_pos1](https://www.wsj.com/politics/policy/trump-economic-vision-policy-plan-e570b32b?mod=hp_lead_pos1) # Trump Tries to Forge ‘Golden Age’ Economy of Self-Reliance and Defiance ## In describing his economic priorities, the president has referenced President William McKinley, who presided over an era of rapid industrialization By [David Uberti](https://www.wsj.com/news/author/david-uberti), The Wall Street Journal, Jan. 25, 2025 Trade-war threats. Sweeping deportation plans. A declared “energy emergency.” President [Trump](https://www.wsj.com/topics/person/donald-trump)’s whirlwind return to office has brought into focus his vision for what he calls a new “Golden Age” of America. [A deluge of executive orders](https://www.wsj.com/politics/policy/trump-executive-orders-c9fa1138?mod=article_inline) and directives in the administration’s first week shows a drive toward a more self-reliant economy that makes more products at home, pumps out more of its own oil and gas and employs more U.S. workers… The president this week directed federal agencies to re-examine U.S. trading relationships. He promised that a 10% tariff on goods from China and 25% tariff on goods from Canada and Mexico would start Feb. 1… To accomplish his goals, Trump wields a powerful economy whose consistent growth is the envy of the world. Unemployment remains low. Hourly wage growth has outpaced overall price increases since May 2023. Household wealth is notching records thanks to high home values and a gravity-defying stock market riding the AI boom… Bond traders in recent months have pushed up yields on the long-term government debt that is a driver of borrowing costs, a warning shot that cutting taxes and immigration in a hot economy could boost inflation and interest rates. A strong U.S. dollar threatens companies that sell goods and services abroad. At the same time, energy investors on Wall Street are openly antagonistic toward Trump’s [“drill, baby, drill” mantra](https://www.wsj.com/business/energy-oil/trump-oil-gas-policy-drilling-donors-3438e99e?mod=article_inline) to boost already record oil-and-gas production and to cut energy costs… [end quote] Everyone knows that it takes time to turn a giant battleship like the U.S. economy. Even so, the stock market popped right after the election and bullish percent increased. The SPX hit a record high over 6,000 while VIX dropped. It’s in a double-top bubble based on CAPE. Bond prices fell (yields rose). The Treasury yield curve now has a mildly positive slope. The yield curve rose along its entire length beginning in September 2024 and fell a little last week. That’s probably noise but the 10YT is near the high of October 2023 in a rough channel. The fed funds rate is 4.25% - 4.50% and the options market doesn’t expect a drop until May. There is actually a 25% chance that the Fed may _raise_ the fed funds rate back to its current rate in June, an indication that some speculators think inflation will increase. During President Trump’s first term in office he brought intense pressure on the Fed to cut the fed funds rate. He will almost certainly repeat this. The Fed will be highly averse to raising rates but they will if they think inflation will rise again. I think they will be more likely to avoid cutting the fed funds rate if they think they might have to raise it later. The Cleveland Fed’s Inflation Nowcast shows Quarterly annualized percent change of the CPI for 2025:Q1at 3.47%. This is far above the 2% goal of the Fed. CPI inflation is used to adjust the principal of TIPS. The Fed’s preferred PCE index is lower but still above their goal. The Atlanta Fed’s GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2024 was **3.0 percent** on January 17. This is strong but sustainable economic growth which could potentially increase inflation. The 5-year breakeven inflation rate is about 2.5% which implies that the market doesn’t believe the Fed can bring it down to 2% with current policies. The markets are risk-on since stocks and junk bonds are rising faster than Treasuries and the USD. The Fear & Greed Index is Neutral. Gold and natgas are rising. Oil has been in a falling trend since April 2024. “Drill, baby, drill” won’t help oil producers if the price keeps falling due to oversupply. “Dr. Copper” is steady in a channel. The METAR for next week is sunny…maybe partly cloudy if the markets feel they have gotten ahead of themselves. I don’t see anything that will pop the bubble. Longer term…trend changes… well, the METAR is a short-term forecast. Wendy > **[CandleGlance | Free Charts | StockCharts.com](https://stockcharts.com/freecharts/candleglance.html?VTSMX,$SPX,$INDU,$NYAD,$NYHL,$COMPQ,$BPNDX,$VIX,$NAHL,$OEXA200R,$GOLD,$NYE%7CB%7C0)** > > Quickly and easily view and analyze mini-charts of up to 12 different symbols simultaneously, all displayed side-by-side on a single page > **[CandleGlance | Free Charts | StockCharts.com](https://stockcharts.com/freecharts/candleglance.html?$IRX,$UST2Y,$TNX,$UST30Y,HYG,$USD,$GOLD,$SILVER,$COPPER,$XOI,$NATGAS,$bcom%7CB%7C0)** > > Quickly and easily view and analyze mini-charts of up to 12 different symbols simultaneously, all displayed side-by-side on a single page > **[CandleGlance | Free Charts | StockCharts.com](https://stockcharts.com/freecharts/candleglance.html?$SPX,$UST,$SPX:$UST,HYG,HYG:$UST,$USD,$GOLD,$Copper,$COPPER:$GolD%7CB%7C0)** > > Quickly and easily view and analyze mini-charts of up to 12 different symbols simultaneously, all displayed side-by-side on a single page > **[Fear and Greed Index - Investor Sentiment | CNN](https://www.cnn.com/markets/fear-and-greed)** > > CNN’s Fear & Greed Index is a way to gauge stock market movements and whether stocks are fairly priced. The index uses seven market indicators to help answer the question: What emotion is driving the market now? > **[Dynamic Yield Curve | Free Charts | StockCharts.com](https://stockcharts.com/freecharts/yieldcurve.php)** > > Visualize the relationship between interest rates and stocks over time using our draggable, interactive yield curve charting tool. > **[GDPNow](https://www.atlantafed.org/cqer/research/gdpnow)** > > GDPNow forecasting model provides a > **[Shiller PE Ratio - Multpl](https://www.multpl.com/shiller-pe)** > > Shiller PE Ratio chart, historic, and current data. Current Shiller PE Ratio is 40.30, a change of -0.04 from previous market close. > **[Inflation Nowcasting](https://www.clevelandfed.org/indicators-and-data/inflation-nowcasting)** > > The Federal Reserve Bank of Cleveland provides daily “nowcasts” of inflation for two popular price indexes, the price index for personal consumption expenditures (PCE) and the Consumer Price Index (CPI). These nowcasts give a sense of where inflation... [https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html](https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html) > **[5-Year Breakeven Inflation Rate | FRED | St. Louis Fed](https://fred.stlouisfed.org/graph/?id=T5YIE,T10YIE,T5YIFR)** > > Graph and download economic data for 5-Year Breakeven Inflation Rate from 2003-01-02 to 2025-12-09 about spread, 5-year, interest rate, interest, inflation, rate, USA, and 10-year. … ---
**Author:** ![OrmontUS](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/ormontus/32/3681_2.png) [@OrmontUS](https://discussion.fool.com/u/OrmontUS)\ **Post date:** [January 26, 2025, 8:26pm UTC](https://discussion.fool.com/t/control-panel-trend-changes/112682/2 "2025-01-26T20:26:12Z")
My concern is, when you turn all the knobs and push all the buttons at once on your audio system, it’s hard to predict if the sound will be improved when you’re done. Jeff (Anchored in Mossel Bay) ---
**Author:** ![mostlylong](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/mostlylong/32/3943_2.png) [@mostlylong](https://discussion.fool.com/u/mostlylong)\ **Post date:** [January 26, 2025, 8:29pm UTC](https://discussion.fool.com/t/control-panel-trend-changes/112682/3 "2025-01-26T20:29:51Z")
> [@WendyBG](#): > > This is far above the 2% goal of the Fed. CPI inflation is used to adjust the principal of TIPS. The Fed’s preferred PCE index is lower but still above their goal. The Fed did what they said they were going to do and cut rates before meeting the 2% target. They **did not say or do** these things: > [@Inflation Slowing](https://discussion.fool.com/t/inflation-slowing/91219/1): > > In fact he said rate hikes would continue until inflation is down to the 2% level. > [@Control Panel: Debt ceiling crisis resolved?](https://discussion.fool.com/t/control-panel-debt-ceiling-crisis-resolved/92900/1): > > The Federal Reserve has said many times that it will not reduce the fed funds rate until inflation has declined to its target of 2% and stayed there for an extended period of time. I guess we can take Powell and team at their word based on the recent tightening/loosening cycle. They are good faith technocrats, lending credibility to their institution at a time when so many question their competence and motives. I just think they are smart, good people (with families, lawns needing cutting, cars needing oil changes - you know, people like you and me), doing the best they can with the tools at their disposal to follow their institutional mandate. And do this in turbulent times. Thank you Fed technocrats. ---
**Author:** ![SuisseBear](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/suissebear/32/3785_2.png) [@SuisseBear](https://discussion.fool.com/u/SuisseBear)\ **Post date:** [January 26, 2025, 8:31pm UTC](https://discussion.fool.com/t/control-panel-trend-changes/112682/4 "2025-01-26T20:31:35Z")
> [@OrmontUS](#): > > My concern is, when you turn all the knobs and push all the buttons at once on your audio system, it’s hard to predict if the sound will be improved when you’re done. The layman would expect significant volatility, wouldn’t he? Not the market though, [apparently](https://stockcharts.com/sc3/ui/?s=%24VIX). ---
**Author:** ![SuisseBear](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/suissebear/32/3785_2.png) [@SuisseBear](https://discussion.fool.com/u/SuisseBear)\ **Post date:** [January 26, 2025, 9:35pm UTC](https://discussion.fool.com/t/control-panel-trend-changes/112682/5 "2025-01-26T21:35:15Z")
Perhaps we won’t have to wait too long for market recognition of that increased volatility? > Following Petro’s announcement, [TCG] criticized him on social media while announcing a slate of new sanctions and policies targeting Colombia, including “ **emergency 25% tariffs** ” on all imports from the country that **will be raised to 50% in a week** , a “travel ban” for Colombian citizens, and a revocation of visas for Colombian officials in the US along with “all allies and supporters.” ---
**Author:** ![MarkR](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/markr/32/2011_2.png) [@MarkR](https://discussion.fool.com/u/MarkR)\ **Post date:** [January 26, 2025, 10:28pm UTC](https://discussion.fool.com/t/control-panel-trend-changes/112682/6 "2025-01-26T22:28:24Z")
> [@WendyBG](#): > > There is actually a 25% chance that the Fed may _raise_ the fed funds rate back to its current rate in June IIRC, the day before the election fedwatch showed a 19% chance of this (not sure if it was June or some other month, but it was there). So it was something believed/considered by many even before Trump was elected. > [@WendyBG](#): > > The Fed will be highly averse to raising rates but they will if they think inflation will rise again. The Fed will not raise rates anytime early in this administration. Because if they do, when the recession comes (and we are surely due for one\*), if they had raised rates, Trump can simply use that as “the reason” for the recession, and blame the Fed. \* We haven’t had a “real” recession since 2010, the COVID recession was artificially induced and relatively short so I don’t count it as a “natural” business cycle recession. Now, there are many out there who believe that an accommodative Fed along with massive deficit spending by Congress has cured recessions forever, but I think they are wrong. > [@WendyBG](#): > > The 5-year breakeven inflation rate is about 2.5% which implies that the market doesn’t believe the Fed can bring it down to 2% with current policies. The 10-year breakeven inflation rate is not much lower at 2.43%. Neither is the 20-year at 2.42%. That means that the market doesn’t believe the Fed will “ever” hit the 2% goal anytime soon. In fact, it almost shows that the market believes that the Fed has accepted 2.5% as the new normal. ---
**Author:** ![solarae100](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/solarae100/32/2514_2.png) [@solarae100](https://discussion.fool.com/u/solarae100)\ **Post date:** [January 27, 2025, 4:47pm UTC](https://discussion.fool.com/t/control-panel-trend-changes/112682/7 "2025-01-27T16:47:29Z")
> [@OrmontUS](#): > > My concern is, when you turn all the knobs and push all the buttons at once on your audio system, it’s hard to predict if the [quote=“OrmontUS, post:2, topic:112682”] > My concern is, when you turn all the knobs and push all the buttons at once on your audio system, it’s hard to predict if the sound will be improved when you’re done. will be improved when you’re done. [/quote] That’s how I got the transmission jammed in our 1960 Plymouth while being left in the car while Mom shopped. Man, was she hot!