Articles authored by Sonu Varghese

We can use fairly timely economic data without having to wait for GDP data or calls from a “recession dating committee” (at the National Bureau of Economic Research) to gauge whether the economy is close to or in a recession, or even recovering for that matter. This includes data like initial unemployment claims, unemployment rate, …

Diversification away from US stocks has been a frustrating exercise for those of us involved in asset allocation for a good 15 years or so now. There have been a few good years, notably 2017, but it’s been rare. Coming into 2025, you would not have thought that international stocks would outperform, let alone by …

Well, this came out of the blue, but a U.S. court essentially cancelled the tariffs that set off a global trade war (technically paused until July). The US Court of International Trade (USCIT) struck down all of the “IEEPA” tariffs imposed by President Trump. IEEPA is the International Emergency Economic Powers Act that was passed …

Short answer: not very much. The longer answer is also pretty much the same thing, but it’s really the context around the debt downgrade, and especially the US fiscal situation, that raises important questions, not the downgrade by itself. Last Friday evening (May 16th), Moody’s finally joined their counterparts at S&P and Fitch in downgrading …

In our 2025 Outlook, we highlighted the threat of tariffs and risk of elevated interest rates if the Federal Reserve doesn’t cut. Well, both have manifested now. Average tariff rates, even after the China pause, are at the highest level since 1934 — rising from 2.4% at the start of the year to 17.8%. If …

Oil prices have collapsed in recent months, with WTI crude oil prices now closer to $60/barrel after hitting $80/barrel in mid-January. Prices are down over 10% from the beginning of the year, and over 20% from peak levels in January. Normally, you’d think this would translate to lower prices at the pump. But that’s not …

Recession calls have increased since the Liberation Day tariff extravaganza, with most economists increasing the odds of a recession in the next 12 months quite significantly relative to odds at the beginning of the year. The Wall Street Journal’s panel of economists raised the probability of a recession in the next 12 months to 45% …

The Federal Reserve (Fed) didn’t move policy rates at their May meeting, keeping them in the 4.25-4.50% range. This was widely expected, but all eyes (and ears) were on how they would telegraph future moves. Short answer: they didn’t. The only major change in the official post-meeting statement was that risks of higher unemployment and …

The economy created 177,000 jobs in April, above expectations for 138,000 jobs. At the same time, this number can be revised quite a lot. (Job creation in February and March were revised down by a combined 58,000.) This is why the 3-month average is more useful, and right now that’s at 155,000. That’s not great, …

Uncertainty may be the new normal. Markets have been extremely volatile, with the S&P 500 experience nine 1%+ intraday moves over the first three days of this week. It’s not that we’ve never seen volatility before — that’s part and parcel of investing. The difference now is that markets are hanging on, and reacting to, …