If a picture is worth a thousand words, perhaps this is the picture to capture what February felt like. And early indications are that March might set us up for more of the same. The month started in a chaos of adjustments – to the potential absence of a “Powell Put” as the new Fed Chairman Jerome Powell seemed to suggest that he would be comfortable leaning against the market strength with a fourth rate rise in 2018. Then on the second day in March, markets hit a third soft patch in a row upon the announcement by President Trump that he would be slapping tariffs on Steel and Aluminum imports with the exhortation that “trade wars are good”. This had commentators rushing to dust off their analysis of the Smoot-Hawley Tariff of 1930 which preceded the great depression and was described as an Act that “intensified Nationalism” all over the world.
The current measures do indeed seem likely to spark retaliation, and swiftly so, and as the stock market wrestles with a concern of over-heating and higher than anticipated inflation, this does indeed seem like an alarming amount of fuel being added to that particular fire.