Latest / Markets with Megan: A Quick Financial Markets Update / Uncertainty Triggers a "Downgrade Parade" | S2 E022 | 03-21-25

Transcript

Uncertainty Triggers a "Downgrade Parade" | S2 E022 | 03-21-25 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: It's been a busy week for central banks this week as well, as we got the OECD, which reduced their global GDP forecast for this year and next year.
• 0:09
  Megan Horneman: It's Friday, march the 21st, and this is Markets with Megan.
• 0:12
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• 0:14
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• 0:18
  Megan Horneman: But we wanted to take today to just summarize some of the comments we got from central banks and then talk about the Federal Reserve, which joined in this downgrade parade of GDP estimates.
• 0:29
  Megan Horneman: So the OECD cut their forecast for this year for global GDP and they noted, along with not only the Federal Reserve but also the Bank of England, the ECB, that a lot of this has to do with trade uncertainty, the potential rise in inflation and, specifically in the US, what this is doing to the consumer.
• 0:49
  Megan Horneman: So the Federal Reserve is only looking for 1.7% GDP this year, that's down from 2.1% in their December meeting, and this follows the Bank of England, who came last month and cut their forecast for GDP in the UK for this year in half.
• 1:05
  Megan Horneman: The ECB has also cut their forecast for GDP because of this trade uncertainty.
• 1:11
  Megan Horneman: Now we have an April 2nd, what we're calling, it's being called the tariff deadline day, and there's going to probably be quite a bit of volatility and negotiations unfolding as we lead up into that.
• 1:24
  Megan Horneman: We think that we're still optimistic that the tariff war, the trade wars, can be a first half of 2025 theme.
• 1:32
  Megan Horneman: We think that the second half is going to be more of a focus on the Tax Cuts and Jobs Act, but we do see that there is downside risk to growth and potential upside risk for inflation.
• 1:42
  Megan Horneman: This, though, we think can be near term and the long term outlook for the US economy still does remain relatively strong.
• 1:48
  Megan Horneman: Now, where we do see the biggest risk from the growth side is these indirect impacts that we're seeing from consumers being very weak, pulling back on spending, businesses in a standstill and not not increasing capex spending spending because of the uncertainty and from an equity perspective, we still haven't seen the downgrades to earnings for this year that coincide with some of these bigger reductions in GDP, and we think that we'll see some more of this as earnings season picks up, and that will be in the week of April 7th.
• 2:22
  Megan Horneman: We'll get the big banks to really kick off earnings season and we'll get a lot more information from companies on how they're dealing with the uncertainty and what they see going forward.
• 2:30
  Megan Horneman: That's all that we have today.
• 2:32
  Megan Horneman: If you want a history of our podcast, you can go to marketswithmeganfm.
• 2:35
  Megan Horneman: Thank you.