VIDEO: Trump’s 'Period of Transition' Ups Market Anxiety

In today’s Daily Rundown video, Chris Versace reviews the changes in S&P 500 EPS expectations that are helping fuel market anxiety, as is President Trump’s comment that the economy could face a “period of transition.” 

He also shares what the Portfolio will be watching for from a data and market technical perspective, and why we’ll continue to freshen up the Bullpen. 

Chris also reminds folks that this week’s Office Hours will be held on Monday in the Forum between 4 p.m. and 5 p.m. ET. 

Transcript

CHRIS VERSACE: Hey, everyone. Chris Versace here. Monday, March 10th. As you know, we're coming off a very challenging week for the market. It's most difficult, I would say, in several months. You know, if you read the Friday roundup with the cause, here is the impact and concern uncertainty over tariffs, inflation, the speed of the economy, and increasingly questions about corporate earnings prospects versus what we saw late last year, even early in 2025.

Stepping into this year, S&P 500 earnings expectations were supposed to grow almost 15% in 2025 compared to 2024. But we've seen those numbers tick lower. And as of Friday, the data collected by FactSet pegs it more like 11.5%. So that's kind of a big cut. But as we dig into it, what I want to share with you is that the earnings expectations, again for the S&P 500, for the first half of 2025, it's fallen about 3% compared to what it was back in the November-December timeframe.

And expectations for the second half of the year compared to the first half? Well, they've elevated. They have risen to almost 14% compared to what they were several weeks ago, at around almost 10%. Now, if you think about that, that says earnings expectations in the second half of the year are going to grow more than 40% than what people thought they were. That's a big number.

And as we think back on the inflation data of late tariffs, we can see why folks are raising questions about earnings growth. And to be fair, we typically see such questions emerge about the second half of the year as we get much closer to the June quarter earnings season. Well, it stands to reason companies have had that much time to understand what's unfolding in the economy, in their sectors, and other potential policy fronts.

But now, because of tariffs and really because of some of the negative GDP numbers for the current quarter that we saw reflected in the Atlanta Fed GDPNow model and President Trump over the weekend, indicating that the economy could face-- you got to love this-- a period of, quote, "transition." And if you remember, early last week, in his address to Congress, he did say that there might be an adjustment period as tariffs take effect. There will be, as he said, "a little disturbance."

Now that on top of everything, we see is simply ratcheting up anxiety uncertainty in the market. And I do think that as we start this week, and as you're probably seeing already, that comment from President Trump about a period of transition is only going to exacerbate the level of uncertainty in the market. But let's remember two things.

First, bad decisions sparked by anxiety are investors most dangerous nemesis. And let's remember the other words from Uncle Warren Buffett. "Better to be fearful when others are greedy and greedy when others are fearful." Now is not the time to let market anxiety dictate what we do.

However, we will recognize the pressure that's been placed on the market, but it is oversold, but not as much oversold as it was in the middle of last week or towards the end of last week, primarily because of the little rally that we saw on Friday. We do also know that the S&P 500 is once again flirting with its 200-day moving average. And as we shared with you last week, if that doesn't hold, we could see 56 50 5600 on the S&P 500.

Yes, that would push it back more towards being more oversold. And, of course, we'll want to continue to watch those market oscillators. So we have a lot of moving pieces that we want to keep our eyes on, heating the technicals but focusing on potential opportunities. But let's think about what's coming this week. Remember, we want to play chess, not checkers. We want to think about all the data that's coming that could potentially upset the market even further.

So today at 10:00 AM, we have the consumer inflation expectations for February. Remember that we saw them jump the last time those numbers came out. So we'll want to be watching that closely. Tuesday, we have the JOLTS report. Wednesday, we have the February CPI. Thursday, February PPI. And Friday, we have the preliminary Michigan consumer sentiment for March.

Very likely, when we amass the PPI, CPI, and that Michigan consumer sentiment data, it's going to show that inflation or inflation expectations are not cooperating. And that could rattle the markets further. Remember last week, Fed Chair Powell said that the economy is fine. The Fed is going to continue to be patient. It will continue to follow the data as they say.

But as we saw with the February PMI data, inflation ratcheting higher during the month, poised to move higher as tariffs take further hold. So we're going to want to be cautious. We're going to want to be careful. And what we'll be doing as we do that, on Friday, we added Palantir to the bullpen. And as the market anxiety continues, we will look to freshen the bullpen up further.

So when the time is right, we are able to strike. But remember, at least in the very near term, bad decisions sparked by anxiety are investor's most dangerous nemesis. We'll want to keep calm, cool heads about ourselves which, look, we know it's not easy in turbulent times, but it is the smarter way to go. So that's what we'll be focusing on.

And with that, we will have a lot more coming your way today. We'll be talking about Taiwan semiconductors February revenue that was reported this morning. Applied Material announced a fresh dividend increase. They also upsized their buyback. We'll have some thoughts on that. And you should be checking out the alert that's already been published, which is the fresh technical look at the S&P 500.

So please be sure to all day-to-day check your emails your Alerts. We want to make sure you're getting our latest thoughts. And remember folks, this week's edition of Office Hours will be after today's market close. Not Wednesday. It's going to be today, March 10th, 4:00 PM to 5:00 PM Eastern in the bullpen. Sorry, in the forum. We might be talking about the bullpen, but we will be in the forum.

Thanks for watching. Again, stay tuned. A lot of stuff coming your way.