Market Volatility Perspective from Inspire Confidence Group

What's Happening?

Fears of a recession have ratcheted up notably over the last several weeks. Part of the reason is the high level of uncertainty regarding trade policy and the rapidly changing stance of the Trump administration on when and if tariffs will be implemented, and how long they may remain in effect. Immediately following the election there was some hope that trade policy wasn't going to be as front-and-center, but the recent focus on close allies and our largest trade partners has sparked increasing economic concern. These fears are reverberating around the economy and showing up in meaningful ways in both business and consumer survey data. Further, tariffs were mentioned at the highest rates across the S&P 500 earnings calls in the last 10 years, with some notable companies publishing worse-than-expected future guidance. Over the last few days, President Trump has made remarks that many perceive as ambivalent toward the possibility of an economic recession resulting from trade policies. The result has been substantial market volatility.

The Bottom Line?

No one likes volatility. Each time market losses rear their ugly heads, we must ask ourselves the same question: Is this fear likely to be sustained, or is it going to dissipate?

History tells us the vast majority of fears dissipate, with equity markets rebounding quickly once the headlines pass.

At some point in the future, we will get a recession-but the data doesn't support that we're getting one right now. With the facts we have today, it's more likely we will experience an intense sell-off followed by a sharp(ish) rebound as investors recognize value in the market, especially in Technology.

The combination of rampant speculation about the impact of tariffs and the "good enough" state of the economy does not align with past recessions like 2000 or 2008 that created sustained and deep volatility for years.

We don't have a crystal ball, and there is a real possibility economic data could deteriorate from here? but just like we said at the end of 2022, the data doesn't support a recession right now.