AIVC - Inflection Points: Trying To Reason With High Vol Season

2025-03-18 11:36:00 ET

Summary

• The DeepSeek rollout and major public policy reversals delivered sharp but short-lived market drops in recent weeks.
• The downshift in sentiment across consumers, small businesses, and investors in recent weeks could increase market vulnerability to shocks as the new administration clarifies the path forward on tariffs, taxes, and spending.
• High volatility can be unsettling, but a range strategies and themes have the potential to reduce portfolio risk without sacrificing growth.

Higher volatility was our base case for 2025—and here it is. ¹ The economic and fundamental backdrops are still reasonably sound, but persistent inflation, higher rates, uncertainty around tariffs, and cuts to government spending will almost certainly be omnipresent factors over the coming months. Whether the financial market–White House honeymoon came to an early end after four weeks or not, there is a very real and consequential race underway to see if meaningful economic public policy success can outrun waning animal spirits. ...

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