Rethinking the Trump put amid lingering growth concerns

The stock market regrouped a bit on Friday, reportedly on Fed Chair Powell’s reassuring view that the U.S. economy continues to be in a good place. The stock market is a bit frazzled again this morning, however, because President Trump, in a weekend interview, implied the U.S. economy might not be in a good place in the near term as it adjusts to the tariff policies of his administration.

Specifically, he told Fox News that there is a “period of transition” underway because of the big things his administration is doing. He deferred on answering directly if the U.S. economy will experience a recession and, maybe more to the unnerving point, said “you can’t really watch the stock market” when you’re trying to build a strong country.

Currently, the S&P 500 futures are down 75 points and are trading 1.3% below fair value, the Nasdaq 100 futures are down 315 points and are trading 1.5% below fair value, and the Dow Jones Industrial Average futures are down 442 points and are trading 1.0% below fair value.

This weakness is a trade of disappointment and a reassessment of the so-called “Trump put” — or lack thereof, as we discussed in The Big Picture column on Friday.

Market participants are losing faith in the notion that President Trump will forestall a market decline with a reversal in his policies if those policies are the basis for a material decline in stock prices. At the least, they have been given a reason to doubt the “Trump put” that wasn’t part of their mindset when the year began.

Once again, there is some risk-off trading action. That is evident in the equity futures market, in the 12.9% increase in the CBOE Volatility Index to 26.39, and in the Treasury market. The 2-yr note yield is down seven basis points to 3.93% and the 10-yr note yield is down nine basis points to 4.23%.

Mega-cap stocks remain an influential drag on the major indices, yet the tenor of things suggests there will be broad-based selling at today’s open, as the macro considerations are outweighing individual company news like Rocket Companies (RKT) acquiring Redfin (RDFN) for $12.50 per share in a stock transaction, Applied Materials (AMAT) announcing a 15% dividend increase and $10 billion share buyback program, and DoorDash (DASH), TKO Group Holdings (TKO), Williams-Sonoma (WSM), and Expand Energy Corp. (EXE) being added to the S&P 500 prior to the open on March 24.

The macro news also includes a February CPI report out of China that showed the first year-over-year deflation reading in 13 months. Total CPI was down 0.2% month-over-month and down 0.7% year-over-year.

In other developments, the House GOP put forth a plan for a continuing resolution that will avert a shutdown on March 14 and keep the government funded through September 30. It includes a slight increase in defense spending and a rollback in spending for nondefense programs to levels below the 2024 budget year. Speaker Johnson is reportedly aiming to bring the bill to a vote in the House perhaps as early as Tuesday.

It is unclear if the Democrats in the House and Senate will be on board with this plan to avert a shutdown, so there will be some added political uncertainty this week, which will also feature the New York Fed’s Survey of Consumer Expectations at 11:00 a.m. ET, Oracle’s (ORCL) earnings report after today’s close, the February Consumer Price Index on Wednesday, the February Producer Price Index on Thursday, and a slate of Treasury auctions that includes a $58 billion 3-yr note auction on Tuesday, a $39 billion 10-yr note auction on Wednesday, and a $22 billion 30-yr bond auction on Thursday.

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Originally Posted March 10, 2025 – Rethinking the Trump put amid lingering growth concerns