May 27, 2025
By Robert Wiedemer

All Across Wall Street, Analysts and Economists are Madly Changing Their Forecasts for the Market and the Economy

After the announcement of a trade deal with China, the market has been on a tear.  In fact, NASDAQ has entered a bull market (up 20% from its recent low).

As such, Wall Street economists and analysts from Morgan Stanley to Goldman Sachs to JP Morgan are changing their forecasts to look much more like my March 10 forecast for the year: The Tariff Trauma would end in a few months, there will be no recession and a solid increase in the stock market by year end – certainly no stock market collapse.  And no big decrease in interest rates. 

Let’s take a look at some of the specific issues the market is facing now and how the rest of my forecast is playing out.

May 1, 2025
By Robert Wiedemer

S&P 500 up 12.7% Since April 8; NASDAQ 100 Actually Closed up 1.5% for the Month of April

The strength and speed of the rebound from the dark days of early April is truly impressive. It was made more impressive because on the morning of April 30 the S&P 500 was down almost 2% but rebounded so much that it closed positive for the day.

Talk about market players buying the dip! As I said in my March 10 Update, we are not heading for a market collapse! In fact, the S&P 500 is only down 4.2% year to date. That’s down but that’s certainly not a collapse as so many were predicting.

April 21, 2025

By Robert Wiedemer

Market Spooked by Trump Talking about Firing Fed Chair Powell, but It’s Not Gonna Happen

The President spooked the markets today by making comments on social media that he would like to fire Fed Chair Powell.  Of course, he does not have the power to do that, but the market doesn’t seem to care. 

In addition to the legal issues preventing him from firing Powell, there would be pushback from his fellow Republicans in Congress, his supporters on Wall Street, and Powell himself, including many who do not want to see the Fed lose its independence.  It’s not going to happen, and Powell will be the Fed Chair until May 2026, when Trump can legally replace him.

However, the market is easily spooked and continues its bearish bias.  That said, it did rally over 1% in the last hour today, but that wasn’t enough to offset previous losses.

April 6, 2025

By Robert Wiedemer

I’m a Little Surprised by Trump but Much More Surprised by Wall Street’s Reaction to Trump

I admit that, like many in the investment community, I was a bit surprised by the high level of tariffs President Trump announced last week.  However, it wasn’t that unexpected in many ways.  President Trump has often talked about high tariffs in the past and had even announced high 25% tariffs on Mexico and Canada a month ago. 

What certainly surprised me was Wall Street’s reaction to the tariffs.  The Street seems to have decided that there is almost zero chance that Trump will negotiate deals that would result in reduced tariffs.  They have this feeling Trump won’t negotiate despite Trump having already negotiated with Canada and Mexico and despite him having said he was willing to negotiate. 

Furthermore, his Treasury Secretary Scott Bessent said that a negotiation to crack down on fentanyl exports from the EU might be enough to resolve that tariff problem, just as it was for Canada and Mexico. More recently, Elon Musk, who certainly has Trump’s ear, has said he is hoping negotiations with the EU would lead to zero tariffs on both sides. 

Most importantly, the big take away from Trump’s announcement of very high tariffs is that there is now no other way to go forward than to negotiate.  They are way too high to last for even a couple of months.  Tom Lee of Fundstrat, a market trends forecaster, was one of the few on Wall Street who said just that:  The tariffs are so high it is clear Trump will negotiate.  Texas Senator Ted Cruz said basically the same thing that tariffs this high are fine for negotiation but if they last 30 days, 60 days or 90 days, they would certainly throw the economy into a recession.

March 19, 2025

By Robert Wiedemer

The market reacted positively today to the Fed’s meeting with the S&P closing up 1.08%. So, the S&P is only down 3.29% year to date.

But the really good news is that the Fed is reducing the amount of bonds it is selling (they are actually rolling off bonds that are maturing but I think it is easier to understand as simply selling bonds). So, instead of selling $25 billion worth of Treasuries each month, they are reducing that to $5 billion.

March 10, 2025

By Robert Wiedemer

The S&P is only down about 4.3% year to date and most of that loss – 2.7% -- occurred in just one day -- today. Yes, the S&P is down 8.6% from its most recent high, but that’s not even a 10% correction. Even if it reaches 10%, such corrections are not that unusual and happen a couple of times almost every year.

What was unusual today is that the market dropped 2.7% on no real news – simply an interview President Trump had with CNBC where, when asked if he predicted a recession, he said he wasn’t sure – it could happen. Such a negative reaction to that comment sounds a lot more like bearish sentiment is amplifying small issues rather than actually being a big issue. I already discussed in my March 2 newsletter why I think sentiment is so bearish lately.

March 2, 2025

By Robert Wiedemer

CNN’s Fear & Greed Index is at 21, a level that reflects extreme fear. According to the weekly survey of the American Association of Individual Investors, bearish sentiment rose from 40.5% to 60% in ONE WEEK. That’s the largest weekly rise since August 2019.

Why is bearishness so high? The usual suspects are fear of tariffs and a slowing economy. No question those are weighing on the market, especially tariffs, but are they really that scary? The economy isn’t slowing enough to make a big difference on earnings and it’s not at all clear what level of tariffs might actually be implemented and for how long. Only the 25% tariffs against Canada and Mexico would be truly disruptive because of their impact on the internationally integrated auto industry. Last time they were announced, they weren’t even implemented. Even if they are implemented, who knows how long they will last.

January 14, 2025

By Robert Wiedemer

Rates Are up Because Bond Buyers Are Tired of Taking a Big Beating

What did I say is the number one issue that’s going to affect the stock market this year? Interest rates -- that’s right. And that’s what’s affecting the market right now.

In particular, the long term rate (10 year) is up half percent in a little over a month to 4.8%. That’s because bond buyers are starting to give up hope that interest rates will be coming down soon. After the Fed meeting in December, it’s becoming increasingly clear that they are not. In fact, the market is now only expecting one rate cut of .25% this entire year.

January 6, 2025

By Robert Wiedemer

This year, I don’t expect the market to perform as strongly as it did in 2023 or 2024. However, it is still poised for solid gains and could even surprise us. According to a FactSet survey, stock analysts predict the S&P 500 will rise by 14.8% in 2025. Analysts underestimated the market in 2023 and 2024, and they might do so again. My own estimate suggests the S&P 500 could climb by 15–20% this year.

Below, I’ll review the key factors that should drive a positive market in 2025, along with some risks we’ll need to monitor. As always, if these risks grow or our outlook changes, we’ll adjust our strategy accordingly. At the outset of 2025, however, I remain optimistic. Here are the primary issues influencing the stock market this year, ranked by importance:

December 19, 2024
By Robert Wiedemer

The government’s new fiscal year kicked off October 1 and its borrowing is breaking all records.  In the first two months of the fiscal year, government borrowing was $624 billion.  That’s an enormous amount and we’ve never seen anything like it before. 

December 16, 2024
By Robert Wiedemer

I thought that since we are in the holiday shopping and entertainment season that it was a good time to talk about consumer spending. And, in particular, why a slowdown in retail and restaurant spending may not have a much impact on the economy as some stock analysts or economists imply.

November 6, 2024

By Robert Wiedemer

As I guessed, undecided voters were more likely to vote for Trump than pollsters had expected. That gave Trump the votes he needed to carry the electoral votes in all the three key swing states -- Wisconsin, Michigan and Pennsylvania – and win the election.

And, as I expected, the market reacted well to a Trump victory with a 2% jump overnight. I think the market strength will continue well into next year and the market will do better than it would if Harris had won.

November 1, 2024

By Robert Wiedemer

In the fall season of any year, that terminology is usually used in reference to a baseball team.  As in “How ‘bout those Dodgers!  Pretty impressive team!”  And they were pretty impressive.  Although there’s no question the Yankees did a lot to contribute to their success by allowing FIVE UNEARNED RUNS in one inning in a make-or-break game.  Without those FIVE UNEARNED RUNS the Yankees would have handily trounced the Dodgers – at least in that game after pounding the Dodgers in the previous game.

But so much for baseball.  The season is over.  Now I can say “How ‘bout those bonds!”  Well, they suck and have for four years.  It’s a terrible record.  No excuses.  No offsets like “stocks have done poorly too.”  In fact, stocks have had a stellar rebound in the last two years. 

October 16, 2024

By Robert Wiedemer

In Short, They Haven’t Had Long Term Effects Before – Not Sure Why That Would Change Now

Stock market fears based on geopolitical risks have usually simply turned into buying opportunities in the past.  The downturns were short lived.  Sometimes, there wasn’t even a downturn.  When the US began bombing Iraq in 2003, the stock market rallied. 

October 10, 2024

By Robert Wiedemer

So, why are rates going up if the Fed just lowered rates? 

Because there are two different rates.  The one the Fed cut is the overnight rate.  That’s a very short-term rate and affects short term interest rates such as money market funds.  The rate for money market funds has promptly dropped almost a half percent from 5.20% to 4.75%.

However, the long-term rate -- the 10 year rate – jumped from 3.8% to over 4%.  It’s not directly affected by the short-term rate.  Mortgage rates are driven in part by the 10 year rate and that’s also why they didn’t fall much after the Fed’s announcement. 

September 20, 2024

By Robert Wiedemer

After much debate over whether the Fed would cut rates on their Wednesday meeting by ¼% or ½%, the Fed announced it had chosen the more aggressive ½% cut.  But it still surprised me and a lot of other economists and market analysts.  I had thought they would cut by ¼% now and ¼% at their November meeting.  But clearly Fed Chair Powell wanted to send out the word that the Fed wants to be supportive of the economy and the stock market.

August 15, 2024

By Robert Wiedemer

Short Term Market Mayhem Almost Gone

Despite the mayhem in July, the S&P 500 closed up 1.1%. Despite all the further mayhem in August, the S&P closed today up 0.3% for the month. That means positive movement for the market for almost two months. So much for a major reckoning in the market!

Short term panics don’t last. That’s why I don’t trade them. It’s simply a good way to lose money. But it’s a great way to create something to talk about and to look smart. That’s why so many stock pundits and analysts do it. Lots of show but it creates little dough.

August 5, 2024

By Robert Wiedemer

Japanese Stock Market Has Collapsed

Last night the Japanese stock market, as measured by the Nikkei 225, plunged 13%. When Friday’s losses are added in, the Nikkei was down 18% -- in only two days.

Very scary -- for Japan and world markets just waking up to the news. In fact, the S&P opened today down over 5% but rallied back quickly and closed down “only” 3%.

It was obvious why the Japanese market was down: After decades of easy money policies where the Bank of Japan has kept rates low and printed massively to do so, they have decided to pull back. They are letting interest rates rise and promising to greatly reduce purchases of Japanese government bonds with printed money.

July 3, 2024

By Robert Wiedemer

With all the discussions about the Presidential election post-debate, I thought it would be a good time for me to weigh in with my thoughts on how the election will affect the stock market.

As per my May 23, 2024 update, I was expecting “modest gains in the market over the summer.” That’s not what we got in June. The S&P 500 is up 3.5% month to date. That’s closer to what I was expecting for the whole summer!

Excitement around AI?

Why such a big surge? The usual suspect is excitement over AI and that’s clearly one reason for the increase with NVIDIA, the benchmark stock for AI, being up 15% in June even after the pullback later in June.

However, why the excitement around AI? No big announcements were made. Yes, Musk is constructing his new computer facility for his GROK AI system in Memphis but that’s not unexpected news and not really a big breakthrough. NVIDIA’s great earnings announcement was in May, not June.