Alright, let's dive into the financial circus that was March 2025. March kicked off with markets still reeling from February’s “growth scare.” The S&P 500 wobbled, and investors squinted at economic data like it held the meaning of life—or at least their 401(k) balance.
The “t” word, tariffs! They were still the economic equivalent of that annoying song you can't get out of your head. Remember the pause on Mexico? Me either, but that felt like a brief moment of sanity in a world increasingly fueled by tariffed tequila dreams. But the talk of "reciprocal" tariffs kept the markets on edge, wondering which beloved consumer good would be next in line for a price hike.
Inflation remained the uninvited guest at every economic party, with Atlanta Fed President Bostic pretty much telling everyone the Fed's 2% target was a pipe dream for the foreseeable future. Rate cut hopes for 2025 were fading faster than my spring break suntan. The Fed, those Powell Rangers, were still in data-dependent mode, which, as usual, meant they were just as confused as the rest of us.
Consumer confidence took a nosedive, hitting a 12-year low and flashing recession warning signs, though some of us were probably just feeling the effects of tariffed tequila. The "Expectations Index" was well below that ominous threshold of 80. So, consumers weren't exactly brimming with optimism.
AI continued to be the shiny object distracting everyone. The CoreWeave IPO hiccup raised some eyebrows about the sustainability of the AI boom, even with $NVDA potentially playing the role of knight in shining armor. Was AI the answer to stagflation, or just another overhyped tech bubble waiting to burst? The jury was still out, and probably still trying to figure out what AI actually is.
Speaking of bubbles, the private credit market was getting some scrutiny too. Despite the rapid growth and attractive expected returns compared to equities, the inherent risks weren't being ignored entirely.
Market performance in March saw the S&P 500 attempting to recover from earlier dips, but volatility was the name of the game. The Magnificent 7 were showing some cracks. Bonds were reacting to inflation data and Fed speak, with the 2-year and 10-year Treasury yields doing their usual dance.
Some random happenings that caught the eye:
The rise of burrito-backed loans – yes, you read that right. Consumers taking out loans to fuel their DoorDash habits via Klarna. Peak 2025 finance? Maybe.
ARK Invest apparently lost more money than any other fund manager in the past decade. Ouch.
The Berkshire Hathaway meeting was apparently going to cost you a cool $5,680 a night for the Hilton across the street. Start saving those burrito loan proceeds!
Investor attention was highlighted as a crucial driver of how markets react to macroeconomic news. So, all those doomscrolling hours might actually be market research? Doubtful.
Overall, March felt like a continuation of the uncertainty that had been brewing. Tariffs, inflation worries, and the ever-present AI hype kept the markets guessing. Consumer confidence was shaky, and the economic outlook was about as clear as mud after a few too many tariffed tequilas. Nobody really knew what was going on, but that, as always, didn't stop anyone from having a strong opinion. And as Mark Twain wisely said, "It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so".
So, take all of this with a healthy dose of "I don't know" and maybe go watch some baseball. It's probably less confusing than the markets right now - despite the early season controversy over torpedo bats.
Some March Learnings:
Beware of first-order thinking and understand second-order effects - be careful reaching quick and certain conclusions in a world mired in uncertainty and complexity
Market narratives drive pricing, but can be fleeting - the line between rational optimism and collective delusion can be blurry
Question conventional wisdom and “what’s priced in” - what’s thought to be priced in isn’t always understood
Recognize the importance of long-term perspectives and patience - Zoom out. Your investment horizon is longer than a news cycle. Most of this is just noise—unless, of course, it’s about your tequila budget
Because You Already Forgot January and February
Missed the first two months of the year? Don’t worry, the themes haven't changed: AI savior complex, tariff tantrums, and inflation drama.
The year kicked off with everyone and their mother trying to figure out if AI was going to save us all or just lead to sentient paperclips. DeepSeek threw a wrench in the GPU-guzzling narrative, making everyone question if $NVDA was the next Pets.com
Trump was back and so were his beloved tariffs. Every other headline was a new tariff threat from champagne to tequila, making happy hour increasingly unhappy.
The Mag-7 have shown cracks, bonds have been all over the place reacting to inflation data, Fedspeak, tariffs and the overall uncertainty. Gold has hit new record highs - e tu Bitcoin?
The first quarter of 2025: a swirling vortex of AI hype, tariff tantrums, inflation anxieties, and enough market volatility to give you whiplash. Nobody really knew what was going on, but that didn't stop the financial news cycle from spinning wildly. As always, blame Canada.
So what awaits us in April and beyond?
Hold on, let me grab my crystal ball. Obviously eyes are glued to April 2nd ‘Liberation Day’, but the correct answer when asked about the financial future is “I Don’t Know.” As for advice, what we covered a couple of weeks ago might be the best I can muster.
We start April with the S&P at 5,612, the 2Y treasury yield down at 3.90% and the 10Y yield at 4.21%. In due time, we’ll see if the April narratives will be different from those of March.
XTODs
Will return tomorrow - not an April Fools.
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