Magnificent Seven Tumbling to Start 2025

2025 has been off to a rough start for most stocks, and at the forefront of them all is the "Magnificent Seven." The Mag 7 are compromised of high performing technology stocks Nvidia, Meta, Microsoft, Amazon, Apple, Alphabet, and Tesla. As of 2025, Tesla has suffered the biggest blow so far with their stock being down 40% year to date while others such as Nvidia, Apple, and Microsoft have also slipped into the negatives among widespread market uncertainty. Additionally, tariff concerns, recession fears, and a broader market selloff have not spared even the industry leaders as these seven stocks have lost billions in value since the beginning of the year. The increased volatility of the market has not helped and has left investors cautious of what is to come in the future.

What I find interesting is how quickly sentiment can switch from optimistic to cautious and fearful. Only last year these companies were performing extremely well and reaching new highs for their stock prices. Some investors may consider this pullback in price necessary in the long run for these stocks to continue with their historic climbs, but it is impossible to say for certain. It will be interesting to track these seven industry leaders over the rest of the year to see if they are able to recoup some of the gains they have lost or if the broader market sell off will continue throughout the whole year.

Link: https://www.cnbc.com/2025/03/21/the-magnificent-7s-lousy-year-by-the-numbers-meta-tesla.html

The Fed will update its rate projections Wednesday. 

 what to expect:

At its March 2025 meeting, the Federal Reserve is expected to maintain interest rates at the current range of 4.25%-4.5% but may adjust projections about future rate cuts, economic growth, and inflation due to uncertainties from President Trump's tariffs and fiscal policies. Although markets anticipate two or three rate cuts by year-end, economists suggest the Fed might scale back expectations to just one cut or none at all, especially given recent increases in inflation expectations. The Fed will update its forecasts for inflation, potentially raising them above the previous estimate of 2.5%, while possibly lowering its GDP growth outlook. Additionally, discussions may include plans to end the Fed's balance sheet reduction ("quantitative tightening") program this year. Chair Jerome Powell emphasize a patient and cautious stance in his press conference, reinforcing the Fed's intention not to rush policy changes amid ongoing economic uncertainties.

Link 

Pessimism in the Stock Market

 With the trade war continuing to intensify the future of the stock market is becoming more and more unclear. The S&P 500 dropped 2.7% to drag it close to 9% below its all-time high. Furthermore, The S&P 500 has swung by more than 1% up and down 7 times in 8 days due to Trump constantly creating tariffs before quickly delaying whether or not they go into effect. Trump is of course trying to bring manufacturing jobs from foreign countries, to the U.S. The Treasury Secretary, Scott Bessent, has also said the economy may go through a “detox” period as it weans off an addiction to spending by the government. Overall, this administration is trying to limit federal spending while also cutting the federal workforce and increasing deportations, which could hinder the job market. There is nothing stable about any of these policies and the expression of pessimism has increased as a result. 

Southwest to start charging for checked bags

    Notoriously low cost airline Southwest has rescinded their defining quality of not charging for checked bags that has set them apart from other airlines for decades. The decision comes from outside pressure from an investment group that took a large stake (five board seats) in the company last year. In an attempt to raise revenue, consumer backlash was received immediately.

    Southwest's new policy favors high-paying, extremely-frequent flyers who will not have to pay additional fees to check their bags. In addition to the checked bag rule, Southwest will be abandoning their changeable/open seating policies. There was no price of a checked bag announced in Southwest's announcement, but competitors are around $35.

    Financially, the effects are currently unknown but the market sentiment indicates that investors believe this was a good move as the stock rose 8% after the announcement. Southwest also said that they would gain $1-$1.5 billion from bag fees but lose $1.8 billion in market share. Overall, while the financial effects on the company are unclear, the effect on the average consumer is clear. Southwest has abruptly gone from the airline for the infrequent flyer to catering to the elite. For consumers like me and you, it is hard to imagine we will stick with Southwest and won't just switch over to more cost effective airlines like Spirit and Allegiant. 

https://www.cnbc.com/2025/03/11/southwest-airlines-charge-checked-bags.html

Stocks close out volatile day as investors say market is ‘sick and tired’ of Trump’s tariff chaos.

    The US markets experienced volatility on Tuesday due to President Donald Trump's renewed threat to impose tariffs on Canada. Markets are regaining some ground after the reports that said US and Canadian officials would meet later in the week to ease tensions and renegotiate trade terms. The S&P 500 dropped by .76, which led to Nasdaq falling by .18. Despite the market downturn, Trump did not care. An investment strategist, Ross Mayfield, noted that investors may not have fully anticipated the level of economic pain currently being experienced. Trump again managed to quiet other Americans’ concerns that nothing terrible was happening with the tariff dilemma. In a briefing on Tuesday, White House Press Secretary Karoline Leavitt echoed Trump's comments that the U.S. is undergoing an economic transition. In addition, investor sentiment has been driven by "extreme fear" over the past two weeks, mainly due to uncertainty surrounding President Trump's fluctuating tariff announcements, according to CNN's Fear and Greed Index.  

Article Link: https://www.cnn.com/2025/03/11/economy/us-stocks-tariffs-trump/index.html

Tariffs' Impact on the Housing Market

The housing market has been reaching new heights in the past few years, but have shown positive signs of potentially coming down as of late. The housing market has a significant impact on the economy and can even cause recessions, as we witnessed in 2007. With the new administration in the United States, a large topic of discussion are tariffs, but their impact on the housing market is quite large. 

According to the National Association of Home Builders, the cost of material needed to build a new home could increase by as much as $10,000. The majority of material, such as softwood lumber and gypsum, are imported from Canada and Mexico. This also affected the Homebuilders S&P Series Trust, as it has dropped 22% since late November as investors are very uncertain about the future. Tariffs can also increase the price of domestic products, so ultimately costs will rise regardless. 

I believe this is something that may get overlooked when talking about tariffs. Many talk about the goods imported from countries like China, but the amount of products imported from other North American countries is significant. Just when we thought housing prices could potentially fall, we've encountered a new problem, one that could be preventable. It’ll be very interesting to keep an eye on the housing market and see if it leads to another recession, such as the recession in 2007. 

https://www.cnbc.com/2025/03/13/tariffs-to-add-as-much-as-10000-to-average-cost-of-new-home-trade-group-says.html 

Is NCAA Tournament expansion a ‘slam dunk’? Where talks stand as March Madness begins.

Link: https://www.nytimes.com/athletic/6208926/2025/03/17/ncaa-basketball-tournament-field-expansion-revenue/

Like many others, this past weekend was marked with a special sort of celebration: the printing of this year’s March Madness bracket. The page is already filled to the brim and it’s hard to believe that there’s a possible future where even more games could be added. 

Currently, the issue seems to be contentious for fans. The support comes from the top dog game commissioners. While most of the conference members believe the expansion would be great for schools and the league as a whole, they all agree it comes down to the numbers. 

Schools that make appearances in the NCAA tournament benefit from payouts that help boost not only their image but also fund the majority of their athletic budget. Take schools like UCONN for example that are staples in the basketball world, they benefit greatly from their image and legacy. Being able to afford huge facility upgrades like their jumbotron upgrade and amassing enough fans to sell out regular season tickets. Now, with talks of an expansion, game commissioners are hoping this effect will benefit smaller schools and serve as a sort of trickle down effect. 

Furthermore, March Madness already accounts for over half of the NCAA revenue (900 million of the 1.4 billion). More teams means more units to distribute, the tournament would have to guarantee they’ll make enough money to keep the distribution at current levels.     

Beyond distribution of revenue concerns, there are also access issues. In order for the expansion to even matter, the tournament needs to reach more audience members.

The Economic Rise of Women’s March Madness

    The 2025 Women’s March Madness tournament is set to be a major financial success, marking a significant milestone in the economic growth of women’s sports. Despite historical funding disparities between men's and women's sports, women's sports have shown resilience and growth. ESPN reported that they sold out its advertising inventory for the championship game months in advance, with ad rates increasing by 175%. Total ad spending in women’s sports rose to $244.4 million in 2024, a 139% increase from the previous year. Advertising investments are coming from industries such as automotive, pharmaceuticals, and telecommunications, highlighting the growing appeal of women's sports to a wide range of sectors. Standout players like UConn’s Paige Bueckers and USC’s JuJu Watkins are helping drive viewership and sponsorship value.

    The economic impact of women’s sports extends beyond advertising. Despite receiving less funding, women's sports have seen a 300% growth in global revenues from 2021 to 2024. The "Caitlin Clark effect" helped boost interest and viewership in women’s college basketball, contributing to record viewership in the 2024-25 regular season. Brands are recognizing the value of women’s sports due to high engagement among female fans, who often buy merchandise and share enthusiasm on social media. This shift highlights the growing importance of women’s sports in the sports economy. It will be interesting to see how the 2025 March Madness tournament unfolds and whether any new records will be set on the women's side, further solidifying its position in the sports world.

Read the article here: https://www.forbes.com/sites/lindseyedarvin/2025/03/16/the-money-and-momentum-behind-womens-march-madness/

The Future of Social Security

    The Social Security Administration (SSA) is experiencing challenges because of cost-cutting efforts led by Elon Musk's DOGE team. The SSA plans to cut up to 12% of its workforce, close several offices, and offer early retirement payouts to employees. These plans could destabilize the program that supports millions of people. Current and former officials warn that these cuts could lead to system collapses, increased wait times, and disruptions in benefit payments. The agency's aging technology, which relies on programming languages from the 1970s, further intensifies these concerns.

    Social Security is vital for many Americans, especially those over 65, who rely on these benefits for a significant portion of their income. Nearly 9/10 people in this age group receive Social Security, with about 30% of their income coming from these benefits. The SSA's aging technology and loss of experienced staff pose a large risk in the continuity of services. Critics liken the approach to a destructive strategy, similar to Musk's actions at Twitter, where established systems are dismantled without a clear plan for improvement. The White House has assured that benefits themselves will not be cut, but the delivery and administration of these benefits are at risk due to the ongoing restructuring efforts.

Read the article here: https://www.nytimes.com/2025/03/17/business/social-security-doge-ssa.html

China attempting to boost consumption, right economy

 China is attempting to boost its consumption numbers and improve their economic standing. China already supplies to many international consumers, but this plan will aim to boost the domestic consumption numbers. They want to increase inbound tourism, with focus given to ice and snow regions to develop them into premier tourist destinations for winter sport and activities. There will also be a call to help boost the incomes of rural workers in China.

With the US economy in question, China will try and take advantage of every opportunity they can get to boost theirs. They have struggled with some stagflation following COVID-19, but a focus on domestic economics could give them a boost.

https://www.cnbc.com/2025/03/17/china-economy-plan-to-boost-domestic-consumption.html

Asia-Pacific markets climb after China outlines plan to boost consumption

 Asian-Pacific markets surged on Monday as investors reacted to China’s latest policy measures aimed at boosting consumption and stabilizing key sectors like real estate and the stock market. The Chinese government announced plans to raise incomes, encourage higher birth rates, and support private enterprises, fueling optimism among investors. Key economic indicators, including industrial production and retail sales, were also in focus, with forecasts suggesting moderate growth. Major indices in Japan, South Korea, and Australia posted gains, while Hong Kong’s Hang Seng Index rose 1.45%. Meanwhile, U.S. markets rebounded strongly on Friday, with the S&P 500 and Nasdaq seeing their best performance of the year, led by a sharp recovery in tech stocks. Analysts remain cautiously optimistic about China’s economic outlook, emphasizing the role of government support in shaping market sentiment.

Asia markets live: Stocks climb on China's consumption boost plans

Trade Tensions at the Economic Outlook

At the Economic Outlook, Christine Lagarde, the president of the European Central Bank stated that banks and policymakers alike are grappling with “exceptionally high” uncertainty, in regards to high trade tensions and geopolitical shifts resulting from the actions of the Trump administration. These tensions and shifts are due to the Trump administration's unpredictable tariffs, military spending, and alliances. These actions have caused European countries to take defensive actions, the European Commission announced tariffs on US imports alongside Canada in addition to increased proposals by European officials to borrow more funds to increase military spending. Additionally, at the Economic Outlook among many of the ECB officials, there was a bewildered mood, reflections of rapidly shifting economic environments steaming from these trade tensions, their bewilderment indicating how volatile and unpredictable things have become for the future. However, under different circumstances the outlook would have celebrated an impressive achievement, inflation for the eurozone slowed to 2.4% in February and policymakers have cut interest rates size times since the middle of last year.

https://www.nytimes.com/2025/03/12/business/economy/economy-uncertainty-tariffs-europe.html

 Recent Economic News: Potential Recession Fears Amid Tariff Policies

Recent developments in U.S. trade policies have raised concerns about a possible economic recession. President Donald Trump's implementation of significant tariffs on imports from countries like China, Mexico, and Canada has led to retaliatory measures from these nations. This escalating trade tension has contributed to notable declines in the stock market and a drop in consumer confidence. ​

Economists are now reassessing the risk of a recession. Major financial institutions, including JPMorgan Chase and Goldman Sachs, have increased their recession probability estimates. The unpredictability surrounding trade policies has caused businesses to hesitate on investments, further fueling concerns about an economic downturn. ​

Despite these challenges, certain economic indicators remain positive. The U.S. continues to experience job growth, and inflation rates have been lower than anticipated. However, the ongoing uncertainty regarding trade policies adds to economic instability. Experts suggest that stabilizing trade relations could help restore confidence among investors and consumers alike. ​

Source: https://www.ctinsider.com/business/article/recession-trump-tariffs-inflation-stock-market-ct-20215081.php

Economic Uncertainty and Tariffs

    Recent economic concerns have intensified as stock markets decline, consumer confidence weakens, and recession fears rise. The Nasdaq entered a correction, and the S&P 500 neared similar levels, marking a stark contrast from last month’s optimism about tax cuts and deregulation under President Trump. Instead, Trump’s focus on tariffs, such as raising import taxes on Canadian steel and aluminum, has contributed to uncertainty. While most economists still predict economic growth, concerns are mounting with the Federal Reserve’s Atlanta branch projecting a potential economic contraction. Harvard economist Larry Summers estimates a 50 percent chance of recession, citing rising costs and uncertainty. Unlike the limited tariffs of Trump’s first term, the current sweeping import taxes could significantly impact trade and manufacturing. Additional pressures such as federal job cuts and reduced government spending could further slow economic activity. While key recession indicators such as rising unemployment have yet to materialize, the situation remains uncertain.

Source: https://apnews.com/article/economy-trump-recession-78e4513c8990fcc9daa9fdab0dd84e45

Canada Flexes Economic Standing in Midst of Tariff Decisions

    As the Trump Administration's plans for the tariffs continue to be pushed back every time that the start date approaches, the Canadian government is not visibly stressing this scenario. They are instead taking this change and using it to show their economic strength in the international economy. In most recent studies it is shown that Canada has the ninth strongest economy in the world. Multiple movements have begun to push Canadian citizens to "shop Canadian". Essentially urging its consumers to avoid purchasing American products; hoping to prove to President Trump that they are plenty strong on their own not needing help from American corporations.

    This strong sense of Canadian Nationalism started when President Trump made comments about Canada becoming the 51st state of the Union. This outrage made Canadians come together in many patriotic acts to prove how their economy is still healthily growing without the help from its southern neighbor. 

    So far the most visible impact this has made has been on the Liquor Control Board of Ontario, who removed all American liquors from the shelves. Due to the LCBOs barring its customers from purchasing American products it is projected that every year the American spirit-makers will miss out on $1 billion from its Canadian consumers alone. The CEO of Brown-Forman, parent company of Jack Daniel's, said that this impact is worse than the tariffs itself. It is taking away sales from American companies.

    Additionally, it is already being seen that the trips from Canada into the United States are down from past years. This sense of nationalism is proving that most Canadian's are making a large effort to support their country's economy with 6 out of 10 consumers claiming they have changed their purchasing habits since Trump was inaugurated in mid-January. 

Link to Article: https://www.cnbc.com/2025/03/16/see-you-in-four-years-canada-flexes-economic-muscle-as-tariff-negotiations-continue.html 

Canadians Respond to US Tariff Threat

In response to the Trump administration’s attacks on Canadian trade, Canadian citizens are displaying an intense sense of nationalism. The actions taken by Canadians include boycotts of American imports as well as other economic punishments. According to a survey from market research firm Leger, over 60% of Canadians reported buying fewer American products. Additionally, grocery stores are encouraging customers to “shop Canadian” by labeling items that were produced in the country. Going even further is the Liquor Control Board of Ontario which barred its members from ordering American alcohol. Data also shows that fewer Canadians are traveling to the US as trading tensions have risen. These developments are interesting as they show that Canada is not going to easily bend to President Trump’s will, and contrary to what the administration will admit, Canada has more leverage in trade negotiations than many would believe.

https://www.cnbc.com/2025/03/16/see-you-in-four-years-canada-flexes-economic-muscle-as-tariff-negotiations-continue.html

Consumer sentiment slumps in March to lowest since 2022 as Trump tariffs spark more inflation worries

 The University of Michigan's consumer sentiment index fell to 57.9 in March, down from 64.7 in February, marking its lowest level since November 2022. This 11% decline indicates growing economic pessimism across various demographics and political affiliations. Key concerns include rising inflation, trade policy uncertainties, and potential job losses. Additionally, one-year inflation expectations rose to 4.9% from 4.3%, suggesting that consumers anticipate higher prices in the near future. This drop in sentiment could lead to reduced consumer spending, potentially slowing economic growth in the coming months.

https://www.cnbc.com/2025/03/14/university-of-michigan-consumer-sentiment-survey-drops-in-march-to-57point9-worse-than-expected.html