March Market Update – Key Insights & Outlook

February was a volatile month, with the markets seeing a negative return. Below is a summary of the market update for March. To see our full market update, please watch the video at the bottom of this email.

Market Overview

February saw negative stock market returns, but the broader trend remains positive.
The S&P 500 has experienced a 6% pullback from its February highs.
The Fed’s policy remains neutral, with rate cuts now expected in June.
Fiscal policy remains supportive, but concerns persist over the growing federal deficit (6.3% of GDP for 2025).

Economic Indicators & Valuations

Leading economic indicators are neutral, with downward revisions to Q1 GDP growth.
Job growth was disappointing in January, but past months were revised higher.
Inflation shows signs of easing, with Core PCE at its lowest in seven months.
U.S. stock valuations remain high, leading to a choppy start, while international markets have outperformed.

Market Regime & Business Cycle

Our risk stance remains neutral due to mixed signals on economic growth.
The business cycle remains between the mid- and late-stage, with recession risks muted.
Tariffs and Fed rate management pose potential policy risks.

Key Questions for March

Should we worry about a negative February?
- Weakness after a strong 2024 is historically normal. March has often marked a market bottom.
Are there concerns over economic growth?
- Mixed signals: The Atlanta Fed forecasts a Q1 GDP contraction (-2.8% as of 3/6), while Goldman Sachs projects growth (+1.6%).
Will spring bring greener days?
- March is historically a strong month, particularly in the second half.

Positioning & Outlook

Volatility in post-election years is expected, and seasonal trends suggest to us potential market improvement in March- May.
While headwinds remain (inflation, slowing GDP), we remain cautiously optimistic.

We appreciate your time and encourage you to share this update with anyone who may find it helpful.