Slowing, but not yet precipitously; that’s what we can see so far. It is always possible that things snowball, and we then have a recession, but not yet! Uncertainty is why so many businesses and individuals have paused, but sooner or later, decisions must be made. More than likely, this will occur sooner. Never count out the human impulse to sniff out opportunity.

Some of our trading partners’ economies are doing fine. In a still intertwined world, this still counts for a lot. Additionally, our Federal Reserve still has plenty of room to lower interest rates. At signs of slowing, they probably will. (Remember, they also have a mandate to encourage full employment.) Thus, there are forces to mitigate economic slowing.

Longer-term, business trajectory will be driven by opportunities under deregulation and streamlining the regulatory process. The level of interest rates will also be an important factor. These are far more important than tariffs, DOGE, or other issues of the moment. Lower interest rates and regulatory relief are coming, and businesses can’t wait.

The U.S. stock market suffered a correction during February of this year, which then spilled over into March.  It is the first one in about two years. There should be no surprise in this. Normally, the market suffers a correction every year or even more often. This one is overdue.

Profits have been big in high-growth and technology stocks. Hence, these were the first to be sold off as investors hurried to book them. Profits are always easier, for most investors, to take than losses. They typically get very nervous when these begin slipping away.

This correction has probably run its course. A “V” bottom is probably not how a recovery will occur, but it will happen. Most likely, it will take a little time for confidence to return. Investors need to get used to the hyperbolic news cycle and learn to fade so many news bombs of the moment. Fundamentals are still good and supportive of a higher stock market.

Interest rate policy has been on hold since the end of last year. In the meantime, interest rates have been in a trading range. We cannot expect a major move in rates until the Federal Reserve adjusts its policy. This may come as a response to economic slowing or simply their realization that current policy is still restrictive. Soon, it will be time to reduce interest rates. We still believe the next move for interest rates will be lower, perhaps by summer.

The level of interest rate policy is currently too high. Rates are a drag on housing, auto, and even luxury goods sales, such as boats. Lower ones would go a long way toward reviving sales in these areas. Now that the travel and leisure sector is slowing, it may be necessary to give this relief. The timing is uncertain, but lower interest rates are coming. Investors in longer-dated bonds have already recognized this. They have been buying, pushing prices higher and effective rates lower. (Remember, as a bond’s price goes higher, the return from the fixed rate declines.)