High Noise-To-Signal Ratios Unnerving Stock Investors
It’s getting harder to make out the shape of the economy through the fog of Trump 2.0’s firings and tariffs. Indeed, one regional Fed bank sees real GDP contracting this quarter, another sees it expanding, and bad weather has distorted signals from several economic indicators. No wonder the stock market’s default position is risk-off and stocks have been correcting. We’ve lost some confidence that the economy will avoid a recession, raising the odds of one to 35%, up from 20%, last week. And we’re wondering whether Trump Tariff Turmoil 2.0 might trigger a rare kind of flash crash unaccompanied by a recession.
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